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Auto pay will mean bigger interest rate cut on student loans : NPR
NPR • • business
Key Points:
- Starting July 1, the U.S. Department of Education will temporarily increase the interest rate discount for student loan borrowers enrolled in automatic payments from 0.25% to 1%, lasting until June 30, 2028.
- This change aims to encourage more borrowers to enroll in auto pay, as participation dropped from 83% in 2019 to 40% by late 2025, partly due to the COVID-19 repayment pause.
- Borrowers already on auto pay will automatically receive the increased discount, while others have until September 30 to enroll and qualify for the benefit.
- The department intends this incentive to help borrowers reduce their loan balances faster, access new repayment benefits, and improve the overall health of the federal student loan portfolio.
- July 1 also marks the start of additional federal student aid changes, including new repayment plans and caps on graduate student loans.
