Education Department says it will cut student loan interest rates for borrowers in repayment plan

The Department of Education said Thursday that it will reduce student loan interest rates by one percent next month for borrowers who are enrolled in automatic payments.The department said borrowers who are already enrolled in an auto repayment plan do not need to take any further action and will automatically see their interest rates lowered by one percent beginning July 1. The change will remain in effect through June 2028.
“The Trump Administration is making student loan repayment easier than ever, and borrowers should not wait to take advantage of this temporary interest rate reduction to stay on track for key student loan benefits,” Nicholas Kent, the under secretary of Education, said in a statement. “No matter your age or college credential, we want to make sure that borrowers can understand their options and choose a repayment option that works best for them.”
Kent encouraged borrowers who are not already enrolled in a repayment plan to do so by Sept. 30 in order to qualify for the benefit.
The department said in a news release that before the COVID-19 pandemic, more than 80% of student loan borrowers actively paying off their loans were enrolled in auto-pay, but that number has lowered to 40%.
Auto-pay is an optional feature on student loan repayment plans where a borrower’s student loan servicer can automatically deduct the borrower’s monthly student loan payment directly from their checking or savings account.
The Department of Education has also urged borrowers currently enrolled in the Biden administration’s “Saving on a Valuable Education” plan to find a new repayment plan by Sept. 29.
The department said 7.5 million borrowers were still enrolled in the program as of March.
Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage. 

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