Federal Student Loan Interest Rate Reduced for Auto-Pay Enrollees

The U.S. Department of Education has announced a temporary increase in the interest rate reduction for federal student loans on auto-pay. Effective July 2026, borrowers enrolled in auto-pay will receive a 1% reduction, up from 0.25%, for two years. This benefit applies to most Direct Loans issued after July 2012, provided borrowers sign up by September 2026.