Education Department to Cut Student-Loan Interest Rates by One Point for Auto-Pay Borrowers Through June 2028

U.S. Department of Education will lower student-loan interest rates by one percentage point for borrowers enrolled in automatic repayment plans, the agency announced on June 18, 2026. The cut takes effect July 1, 2026, and remains in place through June 2028.

Borrowers already signed up for auto-pay will see the reduction without any action on their part. Borrowers not yet enrolled must sign up by September 30, 2026, to qualify. The department urged those currently in the Saving on a Valuable Education plan to choose a new repayment plan by September 29, 2026.

Nicholas Kent, Under Secretary of Education, said the change is meant to simplify repayment. “The Trump Administration is making student loan repayment easier than ever, and borrowers should not wait to take advantage of this temporary interest rate reduction to stay on track for key student loan benefits,” he said.

Kent added that the department wants borrowers of any age or credential to understand their options.

“No matter your age or college credential, we want to make sure that borrowers can understand their options and choose a repayment option that works best for them,” he said. Auto-pay lets a loan servicer deduct the monthly payment directly from a borrower’s checking or savings account. Before the COVID-19 pandemic, more than 80 percent of actively repaying borrowers used the feature.

As of June 2026, that share had fallen to 40 percent. 5 million borrowers remained enrolled in the Saving on a Valuable Education plan.