Education Department to offer larger auto-pay interest rate discount for student loan borrowers starting July 1
By
Cory Turner
Crisped on the outside, thoughtful enough on the inside.
Summary
The U.S. Department of Education announced a temporary increase in the auto-pay interest rate discount for federal student loan borrowers, effective July 1. The discount will be larger than the traditional 0.25 percentage point reduction, as the Trump administration aims to encourage repayment and address the growing $1.7 trillion federal student loan debt portfolio. Millions of borrowers had opted out of auto pay during the COVID repayment pause, and the new incentive is designed to bring them back into active repayment.
Key quotes
· 3 pulledStudent loan borrowers who enroll in automatic payments will get a much bigger discount on interest starting July 1, the U.S. Department of Education says.
Auto pay has long offered a modest discount off borrowers' interest rate — .25 percentage points — but after millions of borrowers opted out during the long COVID repayment pause, with some making no payments for years, the nation's student debt portfolio swelled to $1.7 trillion.
On Thursday, the department said it will temporarily increase its auto pay interest rate
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