NASFAA Endorses Bipartisan Legislation to Create Fixed 2% Interest Rate on Federal Direct Student Loans
By Maria Carrasco, NASFAA Staff Reporter
NASFAA is endorsing the Lowering Student Loans Act, new bipartisan legislation that would amend the Higher Education Act (HEA) and set a fixed 2% interest rate for all federal Direct student loans, a change that would be applied retroactively to existing Direct loans with higher rates and be fixed for the life of the loan.
The bill, introduced this month by Reps. Mike Thompson (D-Calif.) and James Moylan (R-Guam), would apply to all federal Direct student loans, including Stafford, Unsubsidized Stafford, Parent and Graduate PLUS, and Direct Consolidation Loans, issued on or after July 1, 2026. The legislation would also allow FFEL borrowers to consolidate their loans into Direct loans to access the 2% rate.
NASFAA has endorsed similar legislation in the past that would lower interest rates for federal student loans. Currently, the interest rates for new federal student loans range between 6% to 9%, depending on the loan type.
NASFAA President and CEO Melanie Storey noted that many students and families rely on federal student loans to make higher education possible, and they “deserve interest rates that are fair, transparent, and manageable.”
“The Lowering Student Loans Act would provide meaningful financial relief while committing to a predictable, stable interest rate that allows students to plan for the future with greater confidence,” Storey said in a statement. “When borrowers can anticipate what their loans will cost over time, they are better positioned to make informed decisions about enrollment, completion, repayment, and long-term financial goals.”
The Lowering Student Loans Act is endorsed by several education organizations, including the National Association for College Admission Counseling (NACAC), National Association of Secondary School Principals (NASSP), the National Education Association, and Young Invincibles.
“Too many Americans are doing everything right only to see their balances grow because of high interest rates,” said Thompson in a statement. “This bill is a simple, targeted fix. By lowering interest rates to 2 percent and locking them in for the life of the loan, we help borrowers pay down their principal faster, reduce long-term costs, and finally make real progress toward financial stability.”
The legislation has been referred to the House Committee on Education and the Workforce, where it must advance before a broader House vote.
Publication Date: 3/9/2026
Rita G | 3/9/2026 5:4:56 PM
Can we also get rid of the origination fees as well?
David S | 3/9/2026 8:20:09 AM
A step in the right direction, but I would love to see at the very least, federal student loans be interest-free for Pell-eligible students, and that includes PLUS for their parents, and graduate students who received Pell as undergrads.
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