Education Department Gives Student Loan Borrowers Until Dec. 31 to Lock In a Bigger Autopay Rate Cut

A deadline that was set to close today now runs to the end of the year, giving borrowers three more months to lower their interest rate.

If you have federal student loans, you just got more time to claim a lower interest rate. The U.S. Department of Education announced on Tuesday, September 29, that it is extending the enrollment window for its temporary autopay interest rate cut. The deadline moved from September 30, 2026, to December 31, 2026.

Borrowers who sign up for automatic payments by the new deadline, or who are already signed up, can get the lower rate through June 30, 2028.

What the rate cut is

Autopay means your monthly loan payment is pulled from your bank account automatically on the due date. Federal student loan servicers, the companies that manage your loan and collect payments, have long offered a small discount for using it: 0.25 percentage points off your interest rate.

Under the temporary program, that discount grows to a total of 1 percentage point. For example, a loan with a 6% interest rate would drop to 5% for as long as the discount applies and autopay stays on.

According to the Education Department, nearly 2 million borrowers have enrolled in autopay since the program was announced earlier this year.

Who may qualify

Based on reporting from Forbes and other outlets, the discount applies to federal Direct Loans made after July 1, 2012, including loans for students and for parents (called Parent PLUS loans). Reports describe some additional rules tied to your repayment status and to borrowers who were in the SAVE plan, a repayment plan that has since ended. Because these details can be confusing, the safest step is to ask your loan servicer whether your loans qualify.

Borrowers who were already on autopay when the program was announced should already see the reduced rate, according to the department.

How to sign up

The process is usually quick:

1. Log in to your loan servicer's website. If you are not sure who your servicer is, you can find it by logging in to your account at StudentAid.gov.
2. Look for the autopay or automatic debit option.
3. Enter your bank account details and confirm your payment amount.
4. Check your next statement or account page to make sure the lower rate shows up.

What this means for your wallet

A lower interest rate means less of each payment goes to interest and more goes toward what you actually borrowed. Over the time the discount lasts, that could add up, especially on larger balances.

There is one important catch. Autopay only helps if the money is in your account on payment day. As one debt-relief site pointed out, a single overdraft fee, which is a charge from your bank when a payment takes your balance below zero, could wipe out months of savings on a small loan. A few habits may help:

• Line up the due date with payday. Many servicers let you choose or change your due date.
• Keep a small buffer in checking. Even a modest cushion can prevent an overdraft.
• Turn on low-balance alerts. Most banks can text or email you when your balance drops below a set amount.
• Check that it worked. Confirm the new rate on your statement and keep a screenshot.

If you are already on autopay, there is nothing extra to do, but it may be worth checking that the discount is showing.