A student student sits in a lecture hall while class is being dismissed at the University of Texas at Austin on Feb. 22, 2024 in Austin, Texas.
Brandon Bell | Getty Images
The Trump administration announced on Thursday that it will offer federal student loan borrowers who sign up for autopay a 1-percentage-point reduction on their interest rate, starting July 1.
Borrowers on autopay currently have access to a 0.25-percentage-point discount.
Federal student loan holders who aren’t already enrolled in autopay have until Sept. 30 to do so, if they want to benefit from the lower interest rate. The discount will last through June 30, 2028.
“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,” Under Secretary of Education Nicholas Kent said in a statement.
The announcement comes as tens of millions of borrowers brace for a massive overhaul of the federal student loan system this summer, due to changes from President Donald Trump’s “one big beautiful bill.” The law narrows borrowers’ affordable repayment plans and other relief measures.
Over 42 million Americans hold federal student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service.
Only 40% of student loan borrowers in active repayment are enrolled in autopay today, down from over 80% before the Covid pandemic, according to the U.S. Department of Education.
This is a breaking news story. Please check back for updates.
