Sponsors (6)
This bill gives servicemembers meaningful interest-rate relief on refinanced/consolidated pre-service student loans and makes the benefit easier to use through existing SCRA processes, but it narrows coverage to certain loans and may reduce lender revenue and add compliance burdens.
Servicemembers who refinance or consolidate pre-service student loans will pay no more than 6% interest during their period of military service, reducing borrowing costs while serving.
The bill defines covered 'student loan' types (including Title IV and private education loans) and extends existing SCRA verification procedures to the new cap, making it easier for servicemembers and lenders to determine eligibility and invoke the benefit using established processes.
Lenders of private education loans may lose interest revenue on refinanced/consolidated pre-service loans, which could prompt them to tighten underwriting or raise rates for other borrowers to offset losses.
Servicemembers are unevenly treated because the cap applies only to consolidations/refinancings of pre-service student loans, leaving those with in-service-originated loans or other types of debt without this protection.
Extending the statutory interest cap and requiring verification of service dates and loan types may increase compliance and administrative burdens for lenders and servicers, potentially delaying processing for borrowers.
Based on analysis of 2 sections of legislative text.
Caps interest at 6% on student-loan consolidations/refinancings taken by a servicemember (or jointly with spouse) for pre-service loans during the period of military service.
Introduced November 20, 2025 by Richard Joseph Durbin · Last progress November 20, 2025
Imposes a 6% annual interest-rate cap on student-loan obligations that a servicemember (or the servicemember and spouse jointly) takes out to consolidate or refinance student loans incurred before entering military service; the cap applies only during the period of military service. Makes conforming edits to the Servicemembers Civil Relief Act’s procedures for invoking the 6% cap and adds an explicit definition of “student loan” to cover federal Title IV loans and private education loans.