Student loan autopay interest rate discount deadline extended
The U.S. Department of Education extended the enrollment deadline for a 1 percentage point interest rate reduction on federal student loans, giving borrowers until Dec. 31 to sign up for automatic payments and lock in the benefit.
The department had set Wednesday as the previous deadline. Borrowers who enroll by the new date, as well as those already enrolled, will receive the reduced rate through June 30, 2028, the department said.
Since the discount launched over the summer, close to 2 million federal student loan borrowers have signed up for autopay, the department said. Before July 1, 2026, the standard autopay discount was 0.25 percentage points.
“Following the Trump Administration’s announcement of the interest rate reduction earlier this year, nearly 2 million borrowers have enrolled in auto pay — helping borrowers reduce long-term interest accrual,” Under Secretary of Education Nicholas Kent said in a statement. “We are excited to see millions of borrowers take advantage of this temporary benefit, which is already driving up repayment rates and improving the overall health of the federal student loan portfolio.”
The department said autopay also helps borrowers access benefits under the new Repayment Assistance Plan, which requires on-time payments. Borrowers in that plan can receive a payment match that prevents interest from accruing and keeps balances declining each month. On-time payments also count toward Public Service Loan Forgiveness, which discharges certain loans after 120 qualifying payments.
According to CNBC, eligibility for the temporary discount is limited to Direct Loan program debt — covering Direct Subsidized, Unsubsidized, PLUS, and Consolidation Loans — with a disbursement date of July 1, 2012, or later. Parent PLUS borrowers are eligible if their loans are also from the Direct Loan program. Loans must be in good standing to qualify. CNBC also noted that the discount excludes both Federal Family Education Loans and any privately held student loans.
Federal student loans carry an average interest rate of 6.54%, CNBC reported.
Borrowers can enroll through their loan servicer’s website. Scott Buchanan, executive director of the Student Loan Servicing Alliance, told CNBC the signup page typically includes a tab called “manage payments” or a similarly worded option, and that completing the request requires only about a minute. Borrowers uncertain about their loan servicer’s identity or contact details can look up that information at StudentAid.gov.
According to the outlet, outstanding federal and private student loan debt surpasses $1.7 trillion, held by upward of 42 million Americans.