Lowering Student Loans Act

Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)) is amended—

(1) by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively;

(2) in paragraph (8)—

(A) in the heading of such paragraph, by striking 2013. and inserting 2013 and before July 1, 2026.; and

(B) in subparagraphs (A) through (D), by inserting and before July 1, 2026, after July 1, 2013,; and

(3) by inserting after paragraph (8) the following:

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans (including such a loan made to a parent on behalf of a dependent student) for which the first disbursement is made on or after July 1, 2026, the applicable rate of interest shall be 2 percent on the unpaid principal balance of the loan.

Notwithstanding the preceding paragraphs of this subsection and subject to subparagraphs (C) and (D), with respect to a loan described in clause (i) for which the first disbursement was made before July 1, 2026, and for which the applicable rate of interest is greater than 2 percent, beginning on July 1, 2026, the applicable rate of interest for such loan shall be 2 percent on the unpaid principal balance of such loan.

Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2026, shall bear interest at an annual rate on the unpaid principal balance of the loan that is 2 percent.

Notwithstanding the preceding paragraphs of this subsection and subject to subparagraphs (C) and (D), any Federal Direct Consolidation Loan for which the application was received before July 1, 2026, and which bears interest at an annual rate on the unpaid principal balance of the loan that is greater than 2 percent, shall, beginning on July 1, 2026, bear interest at an annual rate on the unpaid principal balance of the loan that is 2 percent.

A borrower of a consolidation loan made, insured, or guaranteed under part B may consolidate such loan into a Federal Direct Consolidation Loan under this part in accordance with section 428C(a)(3)(B)(i)(V).

With respect to each borrower with a loan described in subparagraph (A)(ii) or a Federal Direct Consolidation Loan described in subparagraph (B)(ii), the Secretary shall—

(i) not later than the date that is 90 days before July 1, 2026, provide to the borrower notice of the adjustment of the applicable rate of interest for such a loan pursuant to this paragraph, which shall include information relating to opting out of such adjustment as described in clause (ii); and

(ii) allow the borrower to, not later than 90 days after receiving such notice, opt out of such adjustment.

Except as expressly provided in subparagraphs (A) and (B), nothing in this paragraph may be construed to alter or affect the terms, conditions, or benefits of a loan described in this paragraph.

The applicable rate of interest under this paragraph for Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans (including such a loan made to a parent on behalf of a dependent student), and Federal Direct Consolidation Loans shall be fixed for the period of the loan.

Not later than the date that is 90 days before July 1, 2026, the Secretary shall—

(i) notify student loan servicers of the rate adjustments for all loans pursuant to this paragraph; and

(ii) establish a borrower complaint resolution process with respect to any errors or delays relating to such adjustments.

Section 428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 (20 U.S.C. 1078–3(a)(3)(B)(i)(V)) is amended—

(1) in item (cc), by striking the period at the end and inserting a semicolon;

(2) in item (dd), by striking the period at the end and inserting; and; and

(3) by adding at the end the following:

(ee) for the purpose of being eligible for the annual interest rate described in section 455(b)(9)(C).