Eligible federal student-loan borrowers using automatic payments can receive a 1 percentage-point interest-rate reduction under a temporary Education Department policy that began July 1.
The benefit combines the longstanding 0.25 percentage-point autopay discount with an additional 0.75 percentage point. A percentage-point reduction is an adjustment to the loan's stated rate, not a one-percent reduction in the amount owed.
Borrowers must already be enrolled in autopay or enroll by Sept. 30, 2026. The department says the temporary increase is scheduled to remain available through June 30, 2028, provided the borrower stays enrolled and eligible.
The policy applies only to Federal Direct Loans originated after July 1, 2012. Other federal loan types, private education loans and loans outside the stated origination window are not automatically covered by the announcement.
Autopay eligibility and account status are administered through federal loan servicers. Borrowers can review their loan type and servicer information through StudentAid.gov and should rely on their account notices for an individual determination.
The department says more than 80% of borrowers in active repayment used autopay before the pandemic, compared with about 40% when it announced the temporary incentive. Those are agency-wide participation estimates, not a projection of future enrollment.
Automatic payments can fail if account information or available funds change. The rate benefit does not waive scheduled payments, erase accrued balances or guarantee that every payment will process successfully.
The announcement is a repayment-policy change, not individualized financial advice. A borrower's savings depend on principal balance, remaining term, rate and continued eligibility.
The department can issue additional implementation guidance during the two-year period. Servicer communications and StudentAid.gov remain the controlling sources for account-specific questions.