Auto-Pay Expansion Seen as Backdoor Debt Cancellation

The Education Department plans to quadruple the auto-pay interest discount to 1% through 2028, at an estimated cost of at least $5 billion, arguing it helps borrowers enrolled in auto-pay. Critics from the Committee for a Responsible Federal Budget call this “backdoor” debt cancellation that benefits borrowers already in repayment, question its legality, and warn it does not reduce monthly payments. They urge Congress to address the $100+ billion Pell Grant shortfall instead and advocate offsets or alternatives like the existing Repayment Assistance Plan.