Lowering Student Loans Act

Bill Number

H.R. 7810

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Education

Status

Introduced

Latest Action

2026-03-04: Referred to the House Committee on Education and Workforce.

Last Updated

2026-04-10T08:06:15Z

AI-Generated Summary

Purpose of the Legislation

The "Lowering Student Loans Act" (H.R. 7810) aims to reduce the financial burden of federal student loans by setting a fixed interest rate of 2% for certain loans issued or adjusted on or after July 1, 2026. It amends the Higher Education Act of 1965 to make federal student borrowing more affordable, particularly for undergraduate, graduate, and parent borrowers.

Key Provisions

• New Federal Direct Loans: For Federal Direct Stafford Loans, Unsubsidized Stafford Loans, and PLUS Loans (including parent PLUS loans) first disbursed on or after July 1, 2026, the interest rate is fixed at 2% on the unpaid principal balance for the entire loan term.
• Existing Federal Direct Loans: Loans disbursed before July 1, 2026, with interest rates higher than 2% will have their rates reduced to 2% starting July 1, 2026, unless the borrower opts out.
• New Consolidation Loans: Federal Direct Consolidation Loans applied for on or after July 1, 2026, will have a fixed 2% interest rate.
• Existing Consolidation Loans: Similar to direct loans, pre-July 1, 2026, consolidation loans with rates above 2% will be reduced to 2%, with an opt-out option.
• FFEL Program Integration: Borrowers with loans under the Federal Family Education Loan (FFEL) program can consolidate them into a Federal Direct Consolidation Loan to access the 2% rate.
• Borrower Notifications and Protections:
• The Secretary of Education must notify affected borrowers at least 90 days before July 1, 2026, explaining the rate change and opt-out process.
• Borrowers have 90 days after receiving notice to opt out of the rate reduction.
• Other loan terms, conditions, and benefits remain unchanged.
• Implementation Requirements:
• The Secretary must notify loan servicers at least 90 days in advance of the changes.
• A process must be established for resolving borrower complaints about errors or delays in rate adjustments.
• Rate Structure: All affected rates are fixed (do not change over time) and apply only to the unpaid principal.

Significant Changes to Existing Law

• Interest Rate Formula: Prior to this bill, interest rates for federal Direct Loans issued since July 1, 2013, were variable, based on the 10-year Treasury note yield plus a fixed add-on (e.g., 2.05% for undergraduate loans, up to 4.60% for PLUS loans), capped at 8.25%–10.5%. The bill replaces this with a flat 2% fixed rate for loans on or after July 1, 2026, and optionally for earlier loans.
• Retroactive Adjustments: Introduces the ability to lower rates on existing loans (post-2013), which was not previously allowed without refinancing or consolidation under specific conditions.
• Opt-Out Mechanism: Adds a new borrower choice to decline the rate reduction, preserving the prior variable rate structure if preferred.
• FFEL Amendments: Expands consolidation options under the FFEL program (20 U.S.C. 1078-3) to explicitly include eligibility for the new 2% rate, streamlining access for older loans.

Potential Impacts

• On Citizens: Borrowers, especially recent and future college students, graduates, and parents, will face lower interest costs, potentially saving thousands per loan and easing repayment. This could improve access to higher education and reduce long-term debt burdens, though opt-out provisions allow flexibility for those benefiting from higher rates (e.g., in forgiveness programs).
• On Government Agencies: The Department of Education will incur higher upfront costs as the primary lender, since lower rates mean less interest revenue to offset loan subsidies. This may strain the federal budget for student aid programs. Loan servicers will need to update systems and handle notifications/complaints, increasing administrative workload.
• On International Relations: No direct impacts, as the bill focuses on domestic federal lending programs.

Main Stakeholders Affected

• Student Borrowers: Primary beneficiaries, including undergraduates, graduates, parents, and those with existing or consolidatable loans.
• Department of Education: Responsible for implementation, notifications, and oversight of rate changes.
• Loan Servicers: Private entities managing loan accounts, required to adjust rates and resolve issues.
• Higher Education Institutions: Indirectly affected, as lower loan costs may increase enrollment or reduce dropout rates due to affordability.
• Federal Budget and Taxpayers: Bear the cost of reduced interest revenue, potentially influencing future funding for education programs.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: The bill maintains existing loan contracts by not altering non-interest terms, reducing risks of breach-of-contract challenges. The opt-out provision respects borrower autonomy, potentially avoiding due process concerns. It operates within Congress's authority under the Spending Clause (U.S. Constitution, Article I, Section 8) to regulate federal spending on education.
• Constitutional Implications: No apparent conflicts; amendments to the Higher Education Act are standard legislative practice and do not infringe on states' rights or individual liberties beyond voluntary federal loan participation.
• Political Implications: Represents a targeted relief measure for student debt, which has been a bipartisan issue, but could spark debate over fiscal costs (estimated in billions annually) and equity (e.g., benefits skewed toward middle-income borrowers). It may influence broader discussions on education affordability without addressing principal forgiveness or income-driven repayment reforms.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Thompson, Mike [D-CA-4]

Cosponsors (2)

Del. Moylan, James C. [R-GU-At Large], Del. Norton, Eleanor Holmes [D-DC-At Large]

Recent Actions

• 2026-03-04: Referred to the House Committee on Education and Workforce.
• 2026-03-04: Introduced in House
• 2026-03-04: Introduced in House

Bill Versions

• Lowering Student Loans Act — issued 2026-03-04 — PDF (6 pages)