Student loan borrowers will get an interest rate cut if they sign up for auto pay

Source: NPR

June 18, 20261:28 PM ET


Student loan borrowers who enroll in automatic payments will get a much bigger discount on interest starting July 1, the U.S. Department of Education says.

Auto pay has long offered a modest discount off borrowers' interest rate — .25 percentage points — but after millions of borrowers opted out during the long COVID repayment pause, with some making no payments for years, the nation's student debt portfolio swelled to $1.7 trillion.

On Thursday, the department said it will temporarily increase its auto pay interest rate discount to one full percentage point. Practically, that means an undergraduate borrower with a loan at the current 6.39% would see their interest rate drop temporarily to 5.39%.

The rate cut will last for two years, from July 1, 2026 through June 30, 2028. Borrowers already enrolled in auto pay do not need to act. They will automatically receive the rate cut.

Read more: https://www.npr.org/2026/06/18/nx-s1-5863085/student-loan-auto-pay-discount