Student loan borrowers can get 1% interest rate reduction by enrolling in autopay

• Federal student loan borrowers can receive a 1% interest rate reduction by enrolling in autopay by September 30.
• Borrowers already enrolled in autopay will see their interest rate reduced by an additional 0.75 percentage points.
• The interest rate reduction is valid through June 30, 2028.
• This benefit is not available to borrowers in default until they return to good standing.
• The initiative aims to increase repayment rates and improve the federal student loan portfolio's health.

The Department of Education has announced a new benefit for federal student loan borrowers: a 1% interest rate reduction for those who enroll in autopay by September 30, or who are already enrolled. This reduction will be in effect until June 30, 2028.

For borrowers already utilizing autopay, their interest rates will be further reduced by an additional three-quarters of a percentage point. The department stated that this incentive is expected to drive up repayment rates and improve the overall health of the federal student loan portfolio.

Interest rates on federal student loans currently range from 6% to nearly 9%. High interest rates have contributed to the growth of student loan balances, particularly for borrowers who do not consistently make payments.

This announcement comes shortly before a significant student-loan repayment overhaul, including new borrowing caps and repayment plans, is set to take effect on July 1.