June 19, 2026
Federal student loan borrowers could save some money on their student loans if they enroll in autopay.
On June 18, The U.S. Department of Education announced that federal student loan borrowers enrolled in auto pay will be eligible for a 1 percent interest rate reduction beginning July 1. Borrowers who enroll in auto pay by September 30, 2026, or who are already enrolled, will benefit from the interest rate reduction through June 30, 2028.
Beginning on July 1, borrowers will have two new repayment plans: the income-driven Repayment Assistance Plan (RAP) and the Tiered Standard repayment plan. Borrowers enrolling in one of these new plans can also sign up for auto pay.
“No matter your age or college credential, we want to make sure that borrowers can understand their options and choose a repayment option that works best for them,” said Under Secretary of Education Nicholas Kent. This interest rate reduction will help borrowers as they consider new, affordable repayment plans and work to repay their loans on time. We expect this temporary incentive to drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.”
Prior to the COVID-19 pandemic, more than 80 percent of student loan borrowers in active repayment were enrolled in auto pay, which ensures that borrowers make monthly, on-time payments. Today, only 40 percent are enrolled.
Auto pay is an optional feature where a borrower’s student loan servicer can automatically deduct their monthly student loan payment directly from their checking or savings account. Currently, if a borrower enrolls in auto pay, servicers reduce a borrower’s interest rate by 0.25 percent.
To enroll in autopay, borrowers should log into their servicer account and select autopay. If a borrower is already enrolled in autopay, no action is needed.
The Department of Education has released a fact sheet, providing more information on the repayment plans.
