A bipartisan group of lawmakers is racing to force a House vote before the midterm elections on capping federal student loan interest rates at just 2%, a dramatic cut from the rates as high as 9.07% that currently apply to new borrowers. The effort, led by Representatives Jared Moskowitz, Mike Lawler, and Anna Paulina Luna, would bypass committee leadership entirely and put the question directly to the full chamber.
As reported by WDRB, lawmakers are seeking the 2% cap ahead of the midterms. The mechanism they're using is a discharge petition on H.R. 2003, the Affordable Loans for Students Act, which requires 218 signatures to pull a stalled bill out of committee and onto the House floor, according to AcademicJobs.com.
A companion measure, the Lowering Student Loans Act (H.R. 7810), spells out exactly how the cap would work. Introduced in March by Reps. Mike Thompson and James Moylan, the bill would set a fixed 2% interest rate on all new Federal Direct Loans and automatically lower existing Direct Loan rates above 2% down to that level, per a press release from Representative Mike Thompson's office. The bill has drawn endorsements from major education groups including NASFAA and NACAC.
Current Rates Run as High as 9%
The proposal would replace a far steeper baseline. For the 2026-2027 academic year that began July 1, interest rates on new federal loans were set at 6.52% for undergraduate Direct Loans, 8.07% for graduate unsubsidized loans, and 9.07% for Direct PLUS loans, according to Federal Student Aid Partner Connect. Those figures are fixed for the life of each loan and tied to 10-year Treasury note auctions.
Under the Higher Education Act of 1965, the statutory ceiling is even higher — up to 8.25% for undergraduate loans, 9.50% for graduate loans, and 10.50% for PLUS loans, according to Saving For College. Those statutory caps have not changed since 2013, meaning the proposed 2% figure would represent one of the steepest rate cuts to federal lending in over a decade.
A National Debt Load Approaching $1.9 Trillion
The stakes are enormous by sheer scale. The U.S. Department of Education managed $1.61 trillion in federal student loan debt across 40.9 million recipient accounts as of late 2025, with total federal and private student debt topping $1.86 trillion, according to Federal Student Aid Partner Connect data. Student debt remains the second-largest consumer debt category in the country after mortgages.
The push for relief comes just weeks after sweeping structural changes to federal student aid took effect. On July 1, the One Big Beautiful Bill Act — also known as the Working Families Tax Cuts Act — eliminated Grad PLUS loans for new borrowers and folded multiple income-driven repayment options into a single Repayment Assistance Plan, according to Harvard University's Financial Aid Office.
Borrowers Report Payments They Can't Afford
Those changes appear to be landing hard. A nationwide survey of 3,208 student loan borrowers conducted this month by the Student Debt Crisis Center found that 67% reported being unable to afford their restructured monthly payments following the July 1 changes, with median monthly payment increases reaching $500 for many borrowers.
The financial strain has been building for a while. Federal Reserve Bank of New York data showed that roughly 1 million borrowers defaulted on their federal student loans in late 2025, with nearly 10% of total federal student loan balances falling more than 90 days delinquent, as reported by WUFT. Borrowers in default can face garnishment of up to 15% of their disposable pay.
Not Everyone Thinks 2% Goes Far Enough
The 2% cap sits in a contested middle ground politically. Some Democrats want to go much further: the Student Loan Interest Elimination Act, reintroduced by Sen. Peter Welch and Rep. Joe Courtney, would eliminate federal student loan interest entirely, dropping it to 0% rather than capping it at 2%, according to reporting from The College Investor carried by WMUR-TV. Fiscal conservatives, meanwhile, have cautioned against federal interest subsidies of any size.
The geographic stakes vary widely by state. California, Texas, and Florida carry the largest cumulative federal student loan balances in the nation, at $157.1 billion, $138 billion, and $113 billion respectively, while Washington, D.C. carries the highest average per-borrower debt burden at $55,986, according to The Motley Fool. Florida and New York lawmakers have been among those leading the 2% cap effort.
The debate over student debt has been building across multiple fronts this year, from scrutiny of Parent PLUS borrowing at individual universities to broader household debt trends. Whether the discharge petition can gather the 218 signatures needed to force a floor vote before the midterms remains an open question, as does how Senate Democrats pushing full interest elimination would respond to a 2% compromise reaching the floor.
