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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The Trump administration says it is cutting student loan interest. Here are some facts and context
Education Dept Cuts Student Loan Interest Rates
The Hill 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 — if they are not enrolled already. Borrowers who use auto pay already receive a 0.25-percentage-point reduction on their interest rates. T…
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
Education Department says it will cut student loan interest rates for borrowers in repayment plan
The department said borrowers who are already enrolled in an auto repayment plan do not need to take any further action and will automatically see their interest rates lowered by one percent beginning July 1.
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