President Donald Trump said on Oct. 24 that he might support a bill capping federal student loan interest at 2.5 percent. Interest rates for newer federal student loans range from 6.52 percent to 9.07 percent, depending on the loan type.
“President Trump said he will support capping federal student loan interest rates at 2.5%! This has been an issue that I’ve long [championed] in Congress,” Rep. Anna Paulina Luna (R-Fla.) said in an X post on Oct. 24.
“Every American that decides to pursue higher education, especially in STEM, becomes an asset to our nation and gives us an edge on China.”
Luna posted a video of Trump saying “he might” support an interest rate cap.
In June, Luna introduced a resolution asking the House to consider legislation to lower the interest rate on federal student loans to 2 percent.
The issue has been circulating in Congress for a while. Rep. Michael Lawler (R-N.Y.) introduced the Affordable Loans for Students bill in March 2025, which would lower the interest rate on student loans to 2 percent. It sits in the House Committee on Education and the Workforce.
Democrats introduced legislation in 2026 to eliminate interest on federal student loans.
Rep. Joe Courtney (D-Conn.) and Sen. Peter Welch (D-Vt.) reintroduced the Student Loan Interest Elimination Act on March 24 to eliminate interest on federal student loans, offering another approach to reducing borrowing costs.
Courtney said student debt affects 43 million borrowers.
The act would let borrowers refinance current and future federal student loans at zero percent interest, according to a statement from Courtney’s office.
Courtney said interest payments impose a substantial burden on borrowers already struggling with living expenses.
“At a time when Americans are experiencing a cost-of-living crisis, student loan repayment with interest adds a crushing burden to millions of middle-class student loan borrowers,” he said in a statement.
In June, the Department of Education announced that 42.6 million people had federal student loans totaling $1.7 trillion. As of March 2026, about 9 million borrowers had $220 billion in outstanding federal student loans in default.
The Trump administration introduced two student loan repayment plans on July 1 under the One Big Beautiful Bill Act.
The Repayment Assistance Plan bases monthly payments on income and reduces them by $50 for each dependent, according to the Department of Education.
The Trump administration agreed on Oct. 21 to dismiss two appeals seeking to reinstate restrictions on the Public Service Loan Forgiveness program, while a third appeal remained pending, according to court filings.
Federal judges in Massachusetts and Washington struck down an Education Department rule on June 30 that would have excluded employers deemed to have a “substantial illegal purpose.”
Nonprofit organizations, states, and other challengers argued that the department exceeded its authority by imposing restrictions Congress had not authorized.
The federal student loan payment pause began on March 13, 2020, during the COVID-19 pandemic, suspending payments and interest on eligible loans. After extensions under the Trump and Biden administrations, interest resumed on Sept. 1, 2023. Most borrowers’ payments became due again in October 2023, according to the Congressional Research Service.
Naveen Athrappully contributed to this report.
