The U.S. Department of Education said on 18 June that federal student-loan borrowers enrolled in automatic payments will be eligible for a 1 percentage point interest-rate reduction from 1 July 2026. Borrowers already enrolled, or those who join auto pay by 30 September 2026, will receive the reduction through 30 June 2028. Existing auto-pay borrowers now receive a 0.25 percentage point discount, so the department said they will receive an additional 0.75 percentage point reduction during the temporary period.
Table: Federal student-loan autopay discount terms
| Term | Current / temporary rule | Date or value |
|---|---|---|
| Current auto-pay discount | Standard reduction | 0.25 percentage points |
| Temporary auto-pay discount | Total reduction for eligible borrowers | 1.00 percentage point |
| Extra reduction for existing auto-pay users | Increase above current discount | 0.75 percentage points |
| Enrolment deadline | Borrowers must be enrolled by this date | 30 September 2026 |
| Expiry | Temporary reduction runs through this date | 30 June 2028 |
Source: U.S. Department of Education, 2026.
The behavioural target is explicit. The department said more than 80% of student-loan borrowers in active repayment were enrolled in auto pay before the COVID-19 pandemic, compared with 40% now. It argues auto pay helps borrowers maintain access to benefits that require on-time monthly payments, including Public Service Loan Forgiveness and features of the new Repayment Assistance Plan.
The timing gives the discount its policy weight. In an April final-rule release, the department said most provisions of its student-loan repayment changes would take effect on 1 July 2026, with rehabilitation, deferment and forbearance provisions following in 2027 and the sunsetting of some repayment plans in 2028. The June autopay offer is therefore arriving at the same moment borrowers are being asked to understand new plan choices.