NASFAA Endorses Legislation to Lower Federal Student Loan Rates to 2%
By Maria Carrasco, NASFAA Staff Reporter
New legislation from the House of Representatives is seeking to lower the interest rate on all federal student loans, including PLUS loans, to 2%.
The Affordable Loans for Students Act, reintroduced by Rep. Mike Lawler (R-N.Y.) and previously supported by NASFAA when it was first unveiled in 2024, would amend the Higher Education Act (HEA) to lower the interest rate on new and existing Federal Direct Loans to 2%. The current interest rate for federal student loans ranges between 6% to 9%, depending on the loan type.
This 2% interest rate, under the legislation, would also be applied to non-ED-held federal student loans, such as FFEL, Perkins, and loans for health professions students administered by the Department of Health and Human Services (HHS) by giving the Department of Education (ED) the authority to automatically refinance these loans via consolidation. Borrowers could also choose to opt-out of refinancing their loans.
“By adjusting the rate to 2% and doing this retroactively, we’re giving borrowers the flexibility they need to pay off their debt without unnecessary obstacles, like the outrageous additional cost post-graduation that is now synonymous with quality education,” Lawler said in a statement.
NASFAA, along with other higher education organizations, have endorsed this legislation.
Karen McCarthy, NASFAA’s vice president of public policy and federal relations, said that the association has long advocated for systemic solutions to reform student loan repayment.
"By lowering the interest rate on all federal student loans to 2%, the Affordable Loans for Students Act puts forth an equitable approach that would help ease the burden of student loan debt on current and future borrowers,” McCarthy said in a statement. “This legislation is an important step in promoting access to affordable postsecondary education."
Publication Date: 3/31/2025
Jennifer B | 4/1/2025 12:22:18 PM
Agree with all the prior comments about the removal of origination fee.
Mary G | 3/31/2025 3:50:35 PM
If they really meant business, they would get rid of the origination fees as well!
Holly G | 3/31/2025 3:5:40 PM
This would also be a great opportunity to get rid to the Title IX regulation Z disclosure requirements. These HRSA loans are Title VII and VIII require the 3 disclosure statements to be sent. This makes those loan look like private loans to students.
Vincent F | 3/31/2025 11:23:15 AM
@Tony L: Amen! Origination fees drive me nuts.
Tony L | 3/31/2025 10:24:16 AM
This would've been a good opportunity to remove the origination fees on student loans as well.
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