The U.S. Department of Education will temporarily increase the interest rate discount for student loan borrowers who enroll in automatic payments to 1 percentage point, starting July 1, 2026, lasting two years. This aims to encourage repayment and improve the federal student loan portfolio.
Graduates feel exploited as "cash cows" to fund pensions due to student loan changes, MPs heard. Critics compare the "sneaky" alterations to loan terms to mis-selling scandals, with interest rates increasing debt beyond original amounts.
Average student loan debt for bachelor's degree recipients has risen to $43,000, up from $40,000 last year, as college costs continue climbing about 5% annually. Around 46% of 2026 high school graduates will attend four-year colleges, with 42.8 million Americans holding $1.696 trillion in federal student loans. New federal loan limits of $257,500 take effect for borrowers after July 1.
