New bill could reshape student loan debt: Can interest rates be cut to 2%?

Student loan debt is a heavy burden for millions, but a new bipartisan bill is stirring hope that relief might be on the way. Introduced in March 2025 by Reps. Mike Lawler (R-N.Y.), Anna Paulina Luna (R-Fla.), and Jared Moskowitz (D-Fla.), the Affordable Loans for Students Act aims to slash federal student loan interest rates to just 2%-a steep drop from today’s 6% to 9%. With $1.6 trillion in student debt weighing down borrowers, this proposal could be a game-changer if it passes.

The bill’s pitch is simple but powerful: lower interest rates across the board, retroactively applying the 2% cap to existing federal loans and automatically refinancing them-no paperwork required. “This is a game-changer for millions of Americans looking to build a better future without the weight of overwhelming student loan debt holding them back,” Lawler said in a statement.

For a borrower with $30,000 in loans at 6.5%, that could mean shaving monthly payments from $345 to about $280, saving roughly $8,000 over a 10-year term. Luna echoed the urgency, saying, “High interest rates add years, sometimes even decades, to the time it takes for student loans to be paid off. This is unacceptable.”

What makes this stand out is its bipartisan flavor. Lawler, known for crossing party lines, teamed up with Moskowitz, a Democrat, and Luna, a conservative, to bridge the gap on an issue that’s often a political tug-of-war. The National Association of Student Financial Aid Administrators praised it as an “equitable approach” to ease borrower burdens.

How a new bill could change student loan debt forever

Unlike forgiveness plans that spark heated debates, cutting interest rates feels like a middle ground-offering relief without erasing principal balances, which might appeal to both sides of the aisle.

But it’s not a done deal. The 5.06% rate hike CMS just locked in for Medicare Advantage shows the government’s juggling big budget moves, and slashing student loan interest could mean less revenue-potentially a sticking point for fiscal hawks.

Still, the bill’s retroactive angle is a big draw. “Hardworking Americans shouldn’t be saddled with more debt than what they took out just because of interest rates,” Moskowitz noted, highlighting the relief it could bring to many people.

With the GOP controlling the House and the 2025 draft looming, the bill’s fate hangs in the balance. For now, it’s a bold idea that’s got borrowers dreaming of lighter monthly payments and a future where student debt doesn’t feel like a life sentence.