Education Department offers student loan rate cut for automatic payments
The Education Department announced on June 18 that federal student loan borrowers who sign up for automatic payments will receive a 1 percentage point cut to their interest rate for two years, NPR reports . The discount is scheduled to take effect July 1, 2028.
Auto-pay enrollment lowers a lender’s risk of missed payments, and the long-standing 0.25-point auto-pay benefit on federal loans had been suspended during the pandemic-era payment pause. The new, larger discount restores and expands that incentive, though the delayed start date means borrowers see no immediate change.
For a typical balance the savings are modest — on the order of tens of dollars a year per percentage point — but the policy nudges borrowers toward steady repayment and reduces administrative friction for the department’s servicers.