President Donald Trump told reporters last week that he would consider a proposal from Rep. Anna Paulina Luna (R-Fla.) to cap federal student loan interest rates. His answer: “It’s something that I would certainly consider,” which stops short of a formal endorsement.

The comment lands as borrowers carry federal student loan interest rates of 6.52% to 9.07% on new loans this school year.

Luna posted the video on X that night and described it as a firmer commitment. “@potus said he will support capping federal student loan interest rates at 2.5%!” she wrote. Luna has pushed to force a House vote on a 2% interest cap since June, and her post blamed House Democratic Leader Hakeem Jeffries for opposition to the effort. The exchange comes days before the November 3 midterm elections.

Why It Matters

Undergraduate loans disbursed this school year carry a 6.52% interest rate. Graduate loans sit at 8.07%, and PLUS loans for parents and graduate students cost 9.07%. Those rates rose again after the May Treasury auction, so a cap would cut 4 to 6.6 percentage points off what new borrowers pay.

Based on current interest rate trends, it’s likely that these interest rates may be even higher next year.

On a $30,000 balance repaid over 10 years, a 2.5% rate would save an undergraduate borrower about $6,980 in interest over the life of their loan. A graduate borrower would save about $9,870, and a parent with the same PLUS balance would save about $11,800.

A 2.5% fixed rate is also lower than the fixed refinance rates as low as 3.95% that private lenders currently offer, and borrowers would keep their federal protections.

Who Would Actually Save

Everyone would save on interest, but borrowers on income-driven plans would see no change in their monthly bill, because those payments are set by income rather than interest.

The Repayment Assistance Plan already waives unpaid interest each month, so a lower rate mainly helps RAP borrowers whose payments cover their full interest. Borrowers comparing RAP against IBR should still pick a plan based on their goals, since a rate cut doesn’t change either payment formula.

Parent PLUS loans borrowed on or after July 1, 2026 can only be repaid under the Tiered Standard Plan. That leaves new parent borrowers without an income-driven option, so the interest rate drives nearly all of their cost. Those parents also face new Parent PLUS borrowing caps of $20,000 a year per student. Our standing advice is to start repaying Parent PLUS loans while the student is still in school, and a 9.07% rate makes that advice even stronger.

The largest savings would go to borrowers on standard plans and to parents with high-rate PLUS loans.

Critics argue the benefit would skew toward high-balance borrowers who are repaying their loans – effectively a handout to the wealthiest borrowers. The American Enterprise Institute called a 2% cap costly, with a back-of-the-envelope estimate of about $30 billion a year. AEI argued that much of that money would flow to professionals such as doctors and lawyers, a group of borrowers who doesn’t need the subsidy.

How This Connects

The One Big Beautiful Bill Act rewrote repayment plans and loan limits, but it left the federal interest rate formula alone. Rates still follow the May 10-year Treasury auction plus a fixed add-on, as our table of federal student loan rates by year shows. The lowest that undergraduate interest rates have ever been was 2.75% back in 2020-2021, according to our chart of historical federal student loan rates. That would make the current proposal lower than any student borrower has ever paid.

The 2.5% figure Trump and Luna cited also doesn’t match the bipartisan 2% bill Luna has backed. The Affordable Loans for Students Act sets the rate at 2%, and we found no filed bill at 2.5%. That bill would also apply the lower rate to existing federal loans automatically, with an option for borrowers to opt out.

What’s Next

H.R. 2003 has sat in the House Education and Workforce Committee since March 2025. Luna’s H.Res. 1386 would bring it straight to the floor, but it was referred to the Rules Committee on June 24. The discharge petition we covered in June needs 218 signatures to force a vote, and that didn’t happen.

The November 3 midterm elections will decide who controls the House in 2027. Many House Democrats have instead backed a separate bill that would set interest at 0%. Watch for a formal White House position or new bill text that names 2.5%. Until a bill passes and is signed, nothing changes for borrowers.