Student loan borrowers can qualify for lower rates if they use autopay

Student loan rates are about to go down by 1% for millions of borrowers enrolled in automatic payments.

The Department of Education announced Thursday it will temporarily drop interest rates on federal student loans starting July 1, 2026, through June 30, 2028.

The lower rate applies to borrowers who are already making payments with autopay or who enroll in autopay.

The move is designed to incentivize more people to automatically pay off their student debt on time each month.

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Before the COVID-19 pandemic, more than 80% of borrowers in active repayment were enrolled in auto pay. Today, only 40% are enrolled, according to the Education Department.

Americans’ outstanding student loan debt stands at $1.66 trillion, according to the New York Federal Reserve. Defaults are rising as pandemic-era relief programs expire.

Borrowers who are already making payments automatically do not need to take action to qualify for the lower interest rates. The change applies to people with loans that were taken out after July 1, 2012.