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Education Department to cut interest rates by 1 point for autopay borrowers on loans after 2012
The temporary reduction runs from July 1, 2026, through June 30, 2028, and covers loans issued after July 1, 2012. It applies only to borrowers already enrolled in autopay or who sign up for it.
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U.S. Department of Education announced on June 18, 2026, that it will temporarily reduce interest rates on federal student loans by 1 percentage point for borrowers who use autopay. The lower rate takes effect July 1, 2026, and runs through June 30, 2028.
It applies only to loans taken out after July 1, 2012, and only to borrowers already enrolled in autopay or who enroll during the period. Borrowers already making automatic payments do not need to take additional action to receive the reduced rate. S.
66 trillion, according to the New York Federal Reserve. Before the COVID-19 pandemic, more than 80 percent of borrowers in active repayment were enrolled in autopay. As of June 2026, that share had fallen to 40 percent, the Education Department said.
The department said the change is intended to encourage more borrowers to make payments automatically each month.
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