Sponsors (6)
The bill caps interest at 6% for servicemembers who refinance or consolidate pre-service student loans and uses existing SCRA procedures to implement it, reducing costs for covered service members but imposing revenue pressure and compliance costs on lenders and leaving some service members without relief.
Servicemembers who refinance or consolidate pre-service student loans will pay no more than 6% interest during their period of military service, lowering borrowing costs while serving.
Servicemembers and lenders benefit from clearer rules and an existing process: the bill defines 'student loan' to include Title IV and private education loans and extends established SCRA verification procedures to the new cap, making eligibility easier to determine and use.
Lenders of private education loans may lose interest revenue from the 6% cap and could respond by tightening underwriting or raising interest rates for other borrowers to offset losses.
Servicemembers who have other kinds of debt or who do not refinance/consolidate pre-service student loans are not covered, producing uneven relief across service members.
Lenders and borrowers may face increased compliance and administrative burdens verifying service dates and loan types under the statutory cap, which could delay loan processing for some borrowers.
Based on analysis of 2 sections of legislative text.
Caps interest at 6% during military service on loans taken to consolidate or refinance pre-service student loans and adds federal and private loans to the SCRA definition of student loan.
Official title: Amend the Servicemembers Civil Relief Act to extend the interest rate limitation on debt entered into during military service to debt incurred during military service to consolidate or refinance student loans incurred before military service, and for other purposes.
Introduced November 20, 2025 by Richard Joseph Durbin · Last progress November 20, 2025
Limits interest to 6% per year on student loans that a servicemember (or servicemember and spouse jointly) takes out to consolidate or refinance student debt incurred before entering military service for the duration of their military service. It amends the Servicemembers Civil Relief Act so existing procedures for invoking the 6% cap apply to these consolidation/refinance loans and adds a definition of “student loan” that includes both federal Title IV loans and private education loans. The change aims to lower borrowing costs for active-duty military members who refinance or consolidate pre-service student debt, while requiring lenders to follow SCRA verification procedures already used for other covered obligations.