Millions of federal student loan borrowers will see major changes after a series of announcements from the Trump administration's Education Department and Treasury Department. For one, the administration has extended the deadline to secure an interest rate deduction. There will also be a new support center aimed at helping defaulted borrowers return to good standing.
The announcements affect two very different groups of borrowers. For borrowers already paying their loans, the extended autopay deadline provides another three months to secure an interest rate discount that could reduce their long-term borrowing costs. Meanwhile, for borrowers in default, the new portal could simplify what has historically been a lengthy and paperwork-heavy process for getting loans back into good standing.
With more than 42 million Americans holding student loans and total outstanding balances exceeding $1.7 trillion, these policy changes could affect millions of households. The Department of Education has extended the deadline for borrowers to enroll in automatic payments and qualify for a temporary 1-percentage-point reduction in their federal student loan interest rate. Borrowers originally had until September 30 to sign up, but the department announced they now have until December 31 to enroll.
Those who qualify will receive the enhanced discount through June 30, 2028. A full percentage point rate reduction can add up, and they now have until December 31 to enroll,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. The incentive is available to borrowers with eligible Direct Loans issued on or after July 1, 2012, including Direct Subsidized, Direct Unsubsidized, Direct PLUS and Direct Consolidation Loans.
Parent PLUS borrowers may also qualify if their debt is held through the Direct Loan program. However, keep in mind that loans must be in good standing to receive the benefit. In a separate move, the Department of Education and Treasury Department announced the launch of the Defaulted Loans Support Center, a new online portal designed to help borrowers with defaulted federal student loans understand their options and return to repayment.
Secretary of Education Linda McMahon. Now through the new StudentAid.gov platform, borrowers can compare options for resolving their debt and apply for loan rehabilitation or loan consolidation more quickly and easily. They’ll also be able to make payments and review repayment plans and discharge options.
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