By SPEAKIN’ OUT NEWS
WASHINGTON — Millions of federal student loan borrowers could see lower borrowing costs beginning July 1 under a new U.S. Department of Education initiative aimed at encouraging enrollment in automatic payment programs.
The Department of Education announced Thursday that borrowers who sign up for auto pay will receive a full one-percentage-point reduction in their federal student loan interest rate. The temporary benefit will be available from July 1, 2026, through June 30, 2028.
Auto pay is an optional feature that automatically deducts monthly student loan payments from a borrower’s checking or savings account. Officials say the program helps borrowers avoid missed payments while simplifying the repayment process.
The interest rate reduction is expected to provide meaningful savings for many borrowers, particularly those with larger student loan balances. Lower interest rates can reduce the amount borrowers pay over the life of their loans and help more of each monthly payment go toward reducing principal balances.
Education Department officials said the initiative is designed to reward borrowers who make consistent, on-time payments while reducing administrative costs associated with processing payments manually.
Borrowers currently enrolled in auto pay and those who enroll after July 1 will be eligible for the temporary interest rate reduction. The benefit will apply only during the two-year period announced by the department.
The move comes as federal officials continue exploring ways to make student loan repayment more manageable for borrowers facing rising living costs and other financial pressures.
Borrowers seeking more information about the temporary interest rate reduction or how to enroll in automatic payments can visit the Federal Student Aid website at StudentAid.gov or contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) for assistance with repayment options, eligibility requirements, and account questions.