US extends deadline for student loan auto pay interest rate cut to end of 2026
In short
The US Department of Education has extended the deadline for student loan borrowers to enroll in auto pay and receive a 1 percent interest rate reduction to the end of 2026; the original deadline was Sept. 30. The reduction lasts through June 2028, and borrowers already on auto pay receive a 0.25 percent discount, so the change adds 0.75 percent. The Education Department said around 9 million Americans were in default on federal student loans as of June.
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Student loan borrowers in the United States now have until the end of 2026 to enroll in auto pay and have their interest rate reduced by 1 percent, according to the Associated Press report carried by The Seattle Times and The Boston Globe. The original deadline was Sept. 30, but the US Department of Education extended it to give borrowers more time to enroll. The rate reduction will last through June 2028. [ 2 , 3 ]
Borrowers who already use auto pay receive an interest-rate discount of 0.25 percent, so the new reduction adds 0.75 percent, the reports said. The Education Department said the temporary benefit is meant to support borrowers, including those returning to repayment, and to ensure they can stay on top of the new Repayment Assistance Plan, which requires on-time payments. [ 2 , 3 ]
Nearly 2 million borrowers have enrolled in auto pay since the interest reduction was announced this summer, according to the reports. Around 9 million Americans were in default on their federal student loans as of June, the Education Department said, and hundreds of thousands more were behind on payments and at risk of default this year. [ 2 , 3 ]
Lesley J. Turner, an associate professor of public policy at the University of Chicago, said the interest reduction can benefit borrowers who have large balances and are on fixed payments. She also said auto pay is a useful way to stay current even without the rate reduction. “We all know life gets busy and if you have to log in every month and manually make your payment there may be a chance that you forget and then you end up having your loans go delinquent,” she said. [ 2 , 3 ]
To obtain the 1 percent interest reduction, borrowers must enroll in auto pay by Dec. 31, the reports said. Borrowers log in to their student loan servicer account, select auto pay and enter bank information so the monthly payment is withdrawn automatically from a checking or savings account. [ 2 , 3 ]
Why it matters
The extension gives borrowers more time to sign up for a discount the department frames as support for people returning to repayment and for staying current on the new Repayment Assistance Plan, which requires on-time payments. With around 9 million borrowers in default as of June and hundreds of thousands more at risk this year, the enrollment window and the auto-pay incentive are the main tools the documents describe for keeping payments on track.
Key facts
- The deadline to enroll in auto pay and receive a 1 percent student loan interest rate reduction was extended to the end of 2026, from Sept. 30. [ 2 , 3 ]
- The rate reduction lasts through June 2028. [ 2 , 3 ]
- Borrowers already using auto pay receive a 0.25 percent interest-rate discount, so the new reduction adds 0.75 percent. [ 2 , 3 ]
- Nearly 2 million borrowers have enrolled in auto pay since the reduction was announced this summer. [ 2 , 3 ]
- Around 9 million Americans were in default on federal student loans as of June, according to the Education Department. [ 2 , 3 ]
- To enroll, borrowers log in to their student loan servicer account, select auto pay and enter bank information for automatic monthly withdrawals. [ 2 , 3 ]
Confirmed by several sources
- The US Department of Education extended the auto-pay enrollment deadline for the 1 percent interest rate reduction to the end of 2026, from the original Sept. 30 date. [ 2 , 3 ]
- The interest rate reduction lasts through June 2028. [ 2 , 3 ]
- Because auto-pay users already receive a 0.25 percent discount, the new reduction adds 0.75 percent. [ 2 , 3 ]
- The Education Department said the benefit is meant to support borrowers, including those returning to repayment, and to help them stay on top of the new Repayment Assistance Plan, which requires on-time payments. [ 2 , 3 ]
- Nearly 2 million borrowers have enrolled in auto pay since the reduction was announced this summer, and around 9 million Americans were in default on federal student loans as of June, according to the Education Department. [ 2 , 3 ]
Still unclear
- The documents do not say when the extension was announced or how it was made public. Only the original deadline of Sept. 30 and the new end-of-2026 date are given.
- The documents say a 1 percent reduction but also that auto-pay users already get 0.25 percent, so the change “takes off just 0.75 percent.” The documents do not state plainly whether the total discount is 1 percent or whether 0.75 percent is added on top of the existing 0.25 percent.
- What happens to borrowers who were enrolled in auto pay before the July announcement. The Seattle Times and Boston Globe texts both cut off mid-sentence at this point.