The U.S.
Department of Education on Thursday announced a temporary interest rate reduction for federal student loan borrowers enrolled in auto pay, offering up to a 1% rate cut beginning July 1 as major repayment changes take effect.
Borrowers already enrolled in auto pay, or those who enroll by Sept. 30, 2026, will receive the reduced rate through June 30, 2028, according to the department.
Auto pay allows student loan servicers to automatically deduct monthly payments from a borrower’s bank account.
Borrowers currently receive a 0.25% interest rate reduction for using auto pay.
