Government Cuts Student Loan Interest By 1% If Borrowers Use Auto-Pay
Key takeaways
- The rate cut will last until June 30, 2028, and borrowers who have loans that originated after July 1, 2012, are eligible.
- Making automatic loan payments already results in borrowers receiving a 0.25% discount on their interest, so the new announcement will further lower that rate by another 0.75 percentage points.
- Those who already use auto-pay don’t have to do anything to get the additional deduction, which will apply automatically as long as they remain using auto-pay.
Topline Federal student loan borrowers who have auto-pay set up can pay 1% less in interest each month through 2028, the Education Department announced Thursday, offering some relief to borrowers as major changes to the student loan repayment process take effect.
A U.S. Department of Education sign is displayed outside of the agency's federal student aid office on June 3 in Washington, DC.Getty Images Key Facts Borrowers will be eligible to have their interest lowered by 1% on their monthly student loan payments starting July 1, if they are already enrolled in auto-pay—which automatically deducts payments from a borrower’s bank account—or enroll in it before Sept. 30.
The rate cut will last until June 30, 2028, and borrowers who have loans that originated after July 1, 2012, are eligible.