Federal student loan borrowers get more time to claim a bigger interest-rate discount.

A later deadline and a bigger discount

Federal student loan borrowers now have until December 31, 2026 to enroll in automatic payments and qualify for a temporary 1-percentage-point interest-rate reduction, according to CNBC and the U.S. Department of Education. Borrowers who enroll by the deadline, or are already enrolled in autopay, can receive the reduced rate through June 30, 2028.

The temporary discount is larger than the usual 0.25-percentage-point reduction available to some borrowers who use automatic payments.

Who qualifies

The offer applies to qualifying federal Direct Loans originated on or after July 1, 2012. These may include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Eligible borrowers include students and parents, as well as certain borrowers moving from the former SAVE plan to another repayment plan.

Federal Family Education Loan Program loans and private student loans do not qualify for this temporary benefit. The discount continues only while you stay enrolled in autopay, and it does not apply during deferment or forbearance.

How to sign up

To sign up, borrowers should contact their federal loan servicer and enroll in automatic payments. This generally requires providing bank-account information and authorizing the servicer to withdraw each monthly payment automatically. Borrowers who do not know their servicer can find that information on StudentAid.gov.

The takeaway

For consumers, the main takeaway is simple: borrowers with qualifying Direct Loans should check their loan dates and autopay status before December 31, 2026. A one-percentage-point reduction can lower the amount of interest charged while the temporary benefit remains in effect.