Federal Student Loan Interest Rates Reduced for Auto-Pay Enrollment

The U.S. Department of Education has introduced a temporary 1% interest rate reduction for federal student loan borrowers who enroll in auto-pay. This incentive, effective from July 1, 2026, to June 30, 2028, aims to boost auto-pay enrollment following a decline since the pandemic-related repayment pause. The initiative also aligns with new repayment options, including the income-driven Repayment Assistance Plan and the Tiered Standard repayment plan.