Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTLaura GrandeSat, June 20, 2026 at 4:05 PM GMT+2 5 min readFor millions of Americans carrying student debt, a small checkbox on a loan servicer’s website could soon be worth a lot more money.The U.S. Department of Education announced that federal student loan borrowers who sign up for automatic payments will be eligible for a temporary 1 percentage point reduction in their interest rate beginning July 1 (1).Must ReadRobert Kiyosaki says this 1 asset will surge 400% in a year and begs investors not to miss this ‘explosion’Millionaires under 43 hold only 25% of their wealth in stocks. Surprised? Here’s where their money is actually goingJeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — here are 5 ways to build wealth like a landlord without actually being oneThat’s a significant jump from the long-standing 0.25 percentage point discount borrowers have traditionally received for enrolling in autopay. But there’s a catch because borrowers have until only Sept. 30, 2026, to enroll in order to lock in the enhanced rate reduction, which is scheduled to remain in effect through June 30, 2028.For borrowers who are already feeling squeezed by student loan payments, it’s one of the more tangible benefits to emerge as the federal repayment system undergoes yet another overhaul.Who qualifies for it?The interest rate reduction applies to eligible federal direct loans first disbursed on or after July 1, 2012. Borrowers who are already enrolled in autopay don’t need to take any action.According to the Department, they’ll automatically receive the additional 0.75 percentage point reduction beginning July 1, bringing their total discount to a full percentage point.Borrowers who are in default won’t qualify unless they first return their loans to good standing. Meanwhile, borrowers who were enrolled in the now-defunct SAVE repayment plan may need to transition into another active repayment option before they can benefit from the lower rate.And the timing isn’t accidental. The federal student loan portfolio now tops $1.7 trillion and is held by roughly 43 million borrowers, according to the latest data from the Education Data Initiative (2).Before the pandemic-era payment pause, more than 80% of borrowers used autopay. Today, that figure has fallen to about 40%, while millions of borrowers are either delinquent or already in default. The Department has framed the richer discount as a way to encourage borrowers to resume regular repayment habits and avoid falling further behind.The announcement also arrives ahead of broader repayment changes scheduled to take effect this summer, including the rollout of new repayment options and the phaseout of some existing plans.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info