Trump administration temporarily cuts student loan interest rates for borrowers on autopay
The temporary change is meant to boost repayment rates as 42.8 million borrowers face new repayment rules, officials said.
- On Thursday, the Education Department announced a temporary 1% interest rate discount for federal student loan borrowers enrolled in auto-pay, effective July 1, 2026, through June 30, 2028.
- Education Under Secretary Nicholas Kent reported that auto-pay participation plummeted from roughly 83% in 2019 to 40% by late 2025, prompting the department to revive enrollment incentives.
- The initiative will cost an estimated $6 billion and reduce undergraduate interest rates from 6.39% to 5.39% for eligible borrowers who enroll in auto-pay by Sept. 30.
- Starting July 1, the discount accompanies broader federal student loan changes, including implementation of the new Repayment Assistance Plan that replaces previous income-driven repayment options.
- The Trump administration has signaled a stricter approach to student lending, with Education Secretary Linda McMahon stating last year that taxpayers should no longer serve as collateral for irresponsible loan policies.
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20 Articles
Associated Press News
The Trump administration says it is cutting student loan interest. Here are some facts and context
Education Department cuts student loan interest rate
The Education Department said Thursday it will reduce interest rates by 1 percent on student loans for borrowers enrolled in automatic payments starting on July 1. The reduction will be in effect through June 30, 2028. In order to benefit, borrowers must enroll in auto pay by Sept. 30 of this year
Autopay Enrollees to Temporarily Get Lower Interest Rates
Starting July 1, federal student loan borrowers who enroll in autopay will pay a lower interest rate on their loans over the next two years, the Education Department announced Thursday. Currently, borrowers on autopay get a 0.25-percentage-point reduction, but now ED will knock a full percentage point off their interest rates. The benefit will be given to those already signed up for autopay or who opt in to it before Sept. 30 of this year, Educa…
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