The undersecretary said, “We expect this temporary incentive to drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.”
The Department of Education announced that federal student loan borrowers who are enrolled in auto pay, or who enroll by September 30, will be eligible for a 1 percent interest rate reduction that begins July 1. The initiative under the Working Families Tax Cuts Act implements the interest rate reduction through June 30, 2028.
“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,“ Under Secretary of Education Nicholas Kent said. “This interest rate reduction will help borrowers as they consider new, affordable repayment plans and work to repay their loans on time. We expect this temporary incentive to drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.”
The department also announced, “Two new repayment plans will become available on July 1: the income-driven Repayment Assistance Plan (RAP) and the Tiered Standard repayment plan. Borrowers enrolling in one of these new plans can also sign up for auto pay to further streamline their repayment experience.“
As the Lord Leads, Pray with Us…
- For Under Secretary Kent as he oversees the implementation of the auto pay interest rate reduction initiative.
- For prudence for U.S. students as they apply for federal student aid and choose their degree fields.
- For wisdom for Secretary McMahon as she works on measures to return the oversight of public education to state authorities.
Sources: Department of Education
