The U.S. Department of Education is offering a temporary interest-rate reduction of 1 percentage point to federal student loan borrowers who enroll in automatic payments by Dec. 31, 2026, the department said Oct. 26.
who is eligible and how long it lasts
The reduction applies to federal loans that originated after July 2012, the department said. That includes borrowers who had been enrolled in the now‑defunct SAVE plan as well as borrowers on other lawful repayment plans. Borrowers currently in default may also qualify if they bring their loans back into good standing, the announcement said.
- Enrollment deadline: borrowers must be enrolled in automatic payments by Dec. 31, 2026.
- Amount: a 1 percentage point reduction in the loan interest rate for eligible borrowers while the offer is in effect.
- Duration: the reduced rate remains in effect through June 30, 2028, provided borrowers stay enrolled in auto pay and meet eligibility rules.
Under ordinary servicer policies, enrolling in autopay typically reduces the interest rate by 0.25 percentage points. The department’s temporary offer increases that benefit to 1 percentage point for the specified period.
what borrowers should know
To receive the reduction, borrowers must enroll in automatic payments and satisfy any eligibility requirements the department set for the program. The department’s announcement specifies the loan origination cutoff of July 2012; loans originating before that date are not covered by this temporary reduction.
The department framed the measure as a limited‑time adjustment to the standard autopay incentive provided by servicers. Borrowers who enroll should remain in autopay through June 30, 2028 to maintain the reduced rate for the full period the department outlined.
News accounts of the policy cited a Department of Education press release published Oct. 26. Reporting on the change noted the offer’s interaction with existing repayment plans and the timeline for enrollment.
