Federal student-loan borrowers face Sept. 30 deadline for temporary rate cut

Eligible federal student-loan borrowers have until September 30, 2026, to enroll in autopay and qualify for a temporary 1-percentage-point reduction in their interest rate, according to the U.S. Department of Education.

The department announced the policy June 18. The reduction began July 1, 2026, and is scheduled to remain available through June 30, 2028. It lowers the interest rate—not the borrower’s monthly payment by a fixed 1 percent—and is not loan forgiveness or a permanent rate change.

Who may qualify

The policy applies to eligible federal Direct Loans originated after July 1, 2012, including qualifying student and parent loans. Eligibility still depends on the loan type and the borrower’s repayment status, so borrowers should confirm their information through StudentAid.gov and their federal loan servicer.

Borrowers who newly enroll in autopay by the deadline are eligible for the full 1-percentage-point reduction described by the department. Borrowers who were already receiving the standard 0.25% autopay discount do not receive another full 1% reduction. Instead, they are expected to receive an additional 0.75-percentage-point reduction, bringing their total reduction to 1 percentage point.

How enrollment works

Borrowers who are not already enrolled must use their loan servicer’s official website or another approved servicing channel. The process generally requires entering bank-account information and confirming payment details and payment amounts.

The temporary reduction continues only while the borrower remains enrolled in autopay. Before authorizing withdrawals, borrowers should verify that the correct bank account, payment amount, repayment plan, due date and autopay status appear in the servicer account.

After enrollment, borrowers should check both StudentAid.gov and the servicer account for the interest rate and confirmation that the reduction has been applied. Keeping a confirmation email or screenshot can help if the rate or enrollment status does not appear correctly.

Defaulted loans and repayment-plan changes

Borrowers in default cannot simply enroll in autopay and assume they qualify. The Education Department says they must first bring their loans back into good standing, including by consolidating eligible loans and applying for an eligible repayment plan where applicable.

Borrowers who were enrolled in the discontinued Saving on a Valuable Education plan also need to address their repayment-plan status. Federal Student Aid says SAVE is no longer available and borrowers must choose a new legal repayment plan. Autopay enrollment alone may not resolve that issue.

The deadline comes as borrowers adjust to repayment-plan changes that took effect July 1 and as servicers handle account transitions. The Washington Post recently reported conflicting notices, payment-history problems and interruptions affecting some borrowers during the move away from SAVE. That makes it especially important to verify account information rather than assume a change has been processed.

What borrowers should check before Sept. 30

Whether the loans are eligible federal Direct Loans and whether they were originated after July 1, 2012.
The current interest rate shown on StudentAid.gov and by the servicer.
The repayment plan, monthly payment and next due date.
The bank account linked to autopay.
Confirmation that autopay is active.
Confirmation that the temporary rate reduction is reflected or is scheduled to be reflected.

Borrowers who find an error should contact their servicer promptly and keep records of the response. The temporary reduction is scheduled to remain in effect through June 30, 2028, for borrowers who meet the eligibility requirements and remain enrolled in autopay.

Sources

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