Congressman James Moylan has joined Congressman Mike Thompson (CA-04) in introducing bipartisan legislation to cap interest rates on all new federal student loans at a fixed 2 percent. The bill also seeks to lower interest rates on existing federal loans that exceed this rate, with borrowers given the option to keep their current terms if they choose.
The initiative responds to growing concerns over rising college expenses and the impact of high interest rates on student loan repayment. According to lawmakers, while much public debate focuses on loan balances, the accumulating interest is a significant factor keeping borrowers in debt for extended periods.
“Higher education should open doors to opportunity, not create decades of financial strain. For many students and families, the biggest barrier to opportunity is not getting into college—it’s the cost of paying back the loans afterward,” said Congressman Moylan. “Capping federal student loan interest rates at 2 percent is a practical step that helps borrowers reduce long-term costs, pay down their principal faster, and build financial stability. This bipartisan bill helps ensure that higher education remains a pathway to opportunity, not a lifetime of debt.”
The proposal aims to offer relief by reducing interest rather than forgiving principal balances, which supporters say will help manage costs for borrowers without placing undue burden on taxpayers.
“Too many Americans are doing everything right only to see their balances grow because of high interest rates,” said Congressman Thompson. “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 is designed to simplify loan repayment processes, lower default risks, and give students and families greater predictability when planning for higher education expenses.
