Starting July 1, 2026, federal student loan borrowers who opt for autopay will receive a 1-percentage-point reduction on their interest rates, increasing the existing 0.25-percentage-point discount. Borrowers must enroll in autopay by September 30 to qualify for this reduction, which will remain in effect until June 30, 2028.
Under Secretary of Education Nicholas Kent emphasized the importance of this opportunity for borrowers to manage their repayments effectively. Currently, over 42 million Americans hold federal student loans, with total outstanding debt exceeding $1.6 trillion. However, only 40% of borrowers in active repayment are enrolled in autopay, a significant drop from over 80% pre-pandemic.
While consumer advocates encourage borrowers to take advantage of the lower rates to avoid missed payments, there have been reports of issues with autopay, including billing errors. This announcement comes as the federal student loan system is set for major changes under President Trump's legislation, which will alter repayment plans and relief measures