Lower Your Federal Student Loan Interest Rate Before the December 31 Deadline

There's a simple, 5-minute action that will reduce your federal student loan interest rate by 1 percentage point — and you have until December 31, 2026 to do it. Enroll in automatic payments through your federal loan servicer, and the government cuts your rate from the day autopay kicks in through June 30, 2028.

Nearly 2 million borrowers have already enrolled since the expanded discount was announced. If you haven't yet, here's everything you need to know — who qualifies, how much you save, and exactly how to enroll before the deadline.

What Is the Autopay Interest Rate Discount?

The federal autopay discount is a long-standing benefit: borrowers who enroll in automatic payment through their federal servicer have traditionally received a 0.25% interest rate reduction. The expanded discount — a full 1 percentage point — was announced as part of a series of borrower relief measures and is available through June 30, 2028 for eligible loans enrolled by December 31, 2026.

This is not a promotional gimmick. The interest reduction applies to your actual loan balance every month and compounds over time. For borrowers with significant balances, it can mean thousands of dollars less paid over the life of the loan.

Which Loans Qualify?

The expanded 1% autopay discount applies to Direct Loans issued on or after July 1, 2012, with loans in good standing. Here's the full breakdown:

Important: Your Loans Must Be in Good Standing

To qualify for the autopay discount, your loans must be in good standing — meaning not in default and not seriously delinquent. If your loans are in default, the autopay discount won't apply until you exit default through rehabilitation or consolidation. See our guide on the new Defaulted Loans Support Center for how to get back on track first.

How to Enroll — Step by Step

1. Log in to your servicer's website Your servicer is whoever sends you your monthly bill — MOHELA, Aidvantage, Nelnet, Edfinancial, or OSLA. If you're not sure who your servicer is, log in to StudentAid.gov and check your loan details. It will show your servicer name.
2. Navigate to "Autopay" or "Auto Debit" settings Look for a section called "Autopay," "Auto Debit," "Payment Methods," or "Manage Payments." This is usually in your account settings or payment section. Every servicer places it slightly differently.
3. Enter your bank account information You'll need your bank's routing number (9 digits, found on the bottom left of any check) and your checking account number. This is a standard ACH authorization — the servicer will pull your payment automatically each month on your due date.
4. Confirm the autopay authorization You'll usually need to agree to terms and confirm the enrollment. Some servicers require email verification. Do this before December 31, 2026 — the discount applies from the date autopay begins, not the enrollment date, so allow a few days for processing.
5. Verify the rate reduction applied After your first autopay payment processes, log back in and check your interest rate. It should show the reduced rate. If it doesn't, call your servicer and reference the expanded autopay discount program — ask them to confirm the rate has been updated.

Will the Discount Stay After June 30, 2028?

The expanded 1% discount runs through June 30, 2028. After that date, the standard 0.25% autopay discount typically applies if you remain enrolled in autopay. You should not need to re-enroll — once autopay is set up, it continues. But the extra 0.75% (the difference between 1% and 0.25%) is not guaranteed to continue beyond June 2028 without further policy action.

The bottom line: enroll now, lock in the full 1% for the next two years, and reassess in 2028 when the expanded rate expires. Even the standard 0.25% discount is worth keeping — there's no reason to turn off autopay.

Can You Lose the Discount?

Yes — three ways:

• Failed autopay payments — if your bank rejects a payment (insufficient funds, account changes), the discount is suspended until autopay successfully resumes. Keep enough in your account to cover your loan payment each month.
• Canceling autopay — if you switch off autopay, the discount goes with it.
• Loans going into delinquency or default — the discount doesn't apply to delinquent or defaulted loans.

Is Autopay Worth It Even on an Income-Driven Plan?

Yes. Even if you're on IBR or RAP and your payment is income-driven, the 1% rate reduction still applies to your balance. On an income-driven plan, you may not be paying off principal — your monthly payment might not even cover all the interest accruing each month. A 1% lower interest rate means less interest accrual, which means a smaller forgiven balance at the end (and a smaller tax bill if IDR forgiveness becomes taxable again).

There is essentially no downside to enrolling in autopay if you have a bank account and your loans are in good standing. Five minutes now saves real money through 2028.

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