Is it possible that photons lose a small amount of energy over time to become redshifted instead of being redshifted because of an expanding universe? Can photons lose a small amount of energy over time when traveling large distances due to either weak interactions with magnetic fields (Faraday Effect) or due to the way all objects cool and give off thermal radiation (Second law of Thermodynamics) or gravitational interaction with nearby dust particles? If so, would this make the universe seem to be expanding when really, photons are being red shifted because of a small energy loss over time? To me, it seems like the universe is neither expanding nor contracting. Objects such as planets in the solar system or stars in a galaxy rotate and reach an equalibrium that lasts for billions of years.
 A: We live in the age of measurements and observations and specific mathematical theories that fit measurements and observations beyond any doubt.
Photons are elementary particles. . They have zero mass, and other characteristics which separate them from other elementary particles .  

Can photons lose a small amount of energy over time when traveling large distances due to either weak interactions with magnetic fields (Faraday Effect) 

This is an electromagnetic vertex for a photon, the faraday effect is for the emergent light beam from innumerable photons. 

or due to the way all objects cool and give off thermal radiation (Second law of Thermodynamics)

No elementary particles behave thermodynamically. Thermodynamics is an emergent theory over many particles (statistical mechanics). Energy is gained or lost through interactions.

or gravitational interaction with nearby dust particles?

gravitational interactions with a strong gravity well, yes. Dust particles do not have enough gravitational potential for a measurable difference.
In all cases the photon would lose energy by interacting randomly. Random interactions would destroy the spectra coming from stars and galaxies that show a redshift, (loss of energy). After all it is from the displacement of spectral lines of known atoms that the study of observational astronomy took off.
That the universe is expanding we know from measurements of the velocities of clusters of galaxies. None are moving towards us. They are all moving away, and the raisin bread analogy might give an intuition how this can happen.
So the time when one could think up alternate models for the universe by handwaving is long gone. One needs hard measurements and concise mathematical models. 
A: Yes, photons do lose energy because of the expansion of space. Their wavelengths are increased by a factor of $(1+z)$ between when they were emitted at redshift $z$ and when we detect them now. Their energies are therefore decreased by a similar amount.
The "tired light" interpretation of this effect has been discussed, debated and disproved. In my opinion, the most convincing evidence is that we see other phenomena (not photons) at high redshift that have also had their frequencies decreased by exactly the same $(1+z)$ factor. I am thinking specifically of the time decay of type Ia supernovae - these events are thought to be very close to a standard, redshift-invariant explosion. Yet high redshift examples have their light curves "stretched" by just the same cosmological space expansion factor.
A: Anna's answer is perfect in the sense, that photons are indivisible particles, which during their life don't loose energy. Nor Faraday effect, nor magnetic fields or the dispersion with intergalactic dust made the redshift.
At the end of the answer Anna pointed out

that the universe is expanding we know from measurements of the velocities of clusters of galaxies. None are moving towards us. They are all moving away,...

But this measurement is based on the fact of the redshift of the electromagnetic spectra. So primary is the fact of the redshift and secondary is the interpretation of the big bang.
Are there possible other interpretations of where the redshift comes from? Indeed there is an alternative, it is the gravitational redshift. First at all, how this redshift fits with the conclusion that photons are indivisible particles which are not losing energy during their life? If the emission and the receiving of photons takes place in different gravitational potential, in the higher gravitational potential the emission of photons say from hydrogen is redshifted compared to a point of less gravitational potential. And second, do we have the right imagination of how big the mass has to be, from which we able to receive photons over 14 billion light years? So perhaps the theory about gravitational redshift and a not expanding space has a chance in the future again.
