autopay deadline – The U.S. Department of Education says federal student-loan borrowers who enroll in autopay by September 30—or who are already enrolled—will get a one percentage point interest-rate reduction through June 30, 2028. The department says borrowers already in autop
A lower student-loan rate is arriving with a timer attached.
On Thursday. the Department of Education announced that federal borrowers who enroll in autopay by September 30—or who are already enrolled—will receive a one percentage point interest-rate reduction through June 30. 2028. For borrowers who already have autopay turned on. the department said no additional steps are required because their servicers will apply an additional three-quarters of a percentage point.
The incentive is tied to a simple banking setup: autopay is a feature available to all federal borrowers that allows their servicer to automatically deduct their monthly student-loan payment from their bank account.
For many borrowers, the rate cut is modest but not meaningless. The department said the savings can be moderate over time—for example, a graduate program borrower with $50,000 in student debt and a 7.94% interest rate could save nearly $23 per month over the two-year period.
Undersecretary of Education Nicholas Kent said the reduction is meant to help borrowers while they weigh repayment options and work to get their accounts back on track. “This interest rate reduction will help borrowers as they consider new. affordable repayment plans and work to repay their loans on time. ” Kent said in a statement. “We expect this temporary incentive to drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.”.
Borrowers who are already in autopay get the relief automatically, but there’s a clear line for people who are behind. The department said borrowers in default are not eligible for the benefit until they return to good standing.
That eligibility detail lands in a landscape where interest rates already run high—federal student-loan interest rates range from 6% to nearly 9%. The department’s announcement also points to the way that debt can snowball when payments aren’t consistent: if a borrower doesn’t make steady monthly payments. their balances can grow due to interest. sometimes reaching amounts that exceed what they originally borrowed.
The timing matters for another reason. The Education Department’s announcement comes just weeks before President Donald Trump’s sweeping student-loan repayment overhaul takes effect on July 1. The changes include new borrowing caps and new repayment plans, including the Repayment Assistance Plan, which waives unpaid monthly interest. Even so. borrowers are expected to still see their monthly payments increase on that plan. in some cases by hundreds of dollars.
For borrowers making a decision right now. the question is how much relief can be locked in before the July 1 shift. Enrolling in autopay by September 30 secures the department’s one percentage point interest-rate reduction through June 30. 2028. while those already enrolled appear to receive the larger piece of the benefit without needing to do anything.
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student loans autopay Department of Education interest rate reduction federal borrowers Nicholas Kent repayment plans Repayment Assistance Plan default repayment overhaul July 1