The Trump administration has announced a temporary reduction in interest rates for federal student loans, aiming to make higher education more affordable.

Eligibility and Details

The change will only affect a subset of borrowers with federal Direct Loans issued after July 1, 2012, who are already enrolled in automatic payments or sign up for them. To qualify, borrowers must take specific actions, including signing up for auto pay and, in some cases, consolidating their loans.

Currently, just 40% of borrowers are enrolled in auto pay. The department hopes to increase this figure with the new incentive of the interest rate reduction. Nearly 9 million student loan borrowers are in default, meaning they’ve missed nine months of payments. For them to become eligible for the rate reduction, they must get back in good standing, typically by consolidating their loans and then applying for a new repayment plan.

The federal student loan portfolio has ballooned to almost $1.7 trillion, with millions of borrowers struggling to keep up. The rate reduction aims to help get more Americans back on track with student loans as the Trump administration struggles to rein in rising rates of delinquency and defaults on student loans.

Original reporting: Texarkana Gazette — read the source article.