Existing enrollees see autopay rate cut rise from 0.25% to 1%
The U.S. Department of Education has extended the enrollment period for a 1% interest rate reduction on federal student loans by three months. The extension sets a Dec. 31 deadline for new enrollees; borrowers who enroll by that date, or who are already enrolled, will receive the 1% rate reduction through June 30, 2028.
Nearly 2 million borrowers have enrolled in autopay since the rate deduction was announced on June 18, according to the department. The autopay enrollment helps ensure that borrowers make payments on time so they can stay in the new Repayment Assistance Plan, which was designed to replace Biden-era assistance plans.
“Following the Trump Administration’s announcement of the interest rate reduction earlier this year, nearly 2 million borrowers have enrolled in auto pay - helping borrowers reduce long-term interest accrual,” Under Secretary of Education Nicholas Kent said in a statement. “We are excited to see millions of borrowers take advantage of this temporary benefit, which is already driving up repayment rates and improving the overall health of the federal student loan portfolio.”
The extension also increases the rate cut for borrowers who were already enrolled. Those borrowers had previously received a 0.25% interest rate reduction; under the extension, their reduction will rise to 1%.