Federal loan borrowers who enroll in autopay by September 30 will get a one percentage point interest-rate reduction through June 30, 2028. The Department of Education said the temporary cut applies automatically to borrowers already enrolled, while people in default must first return to good standing.
Nicholas Kent on the loan cut
Borrowers already in autopay now receive a quarter percentage point reduction, and servicers will add another three-quarters of a percentage point under the new policy. Nicholas Kent, undersecretary of education, said, “This interest rate reduction will help borrowers as they consider new, affordable repayment plans and work to repay their loans on time” and “We expect this temporary incentive to drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.”
Autopay and the September 30 deadline
One deadline separates the borrowers who get the lower rate from those who miss it: September 30. Autopay lets the servicer automatically deduct the monthly student-loan payment from a bank account, so eligible borrowers do not need to submit a separate payment each month. Those already enrolled do not need to take any action; the rate change flows through their servicers.
One practical detail matters for borrowers weighing the move: federal student-loan interest rates range from 6% to nearly 9%, so a reduction of one percentage point can trim the cost of carrying a balance over time. For a graduate program borrower with $50,000 in student debt at a 7.94% interest rate, the savings could reach nearly $23 per month over a two-year period.
July 1 overhaul from President Donald Trump
On July 1, President Donald Trump's sweeping student-loan repayment overhaul will take effect, adding new borrowing caps and new repayment plans, including the Repayment Assistance Plan, which waives unpaid monthly interest. The timing gives borrowers a short window to decide whether autopay fits their repayment strategy before the new structure starts.
The temporary incentive lasts through June 30, 2028, so the benefit is not a one-month discount. Borrowers in default remain outside the program until they return to good standing, which leaves the policy focused on people who are current enough to enroll or already using autopay. The immediate move for eligible borrowers is simple: enroll by September 30 if they are not already in autopay.
