Enroll in auto pay by 11:59 p.m. ET on September 30, 2026, and your federal student loan interest rate drops by 1%.
The reduction lasts through June 30, 2028. Miss the date, and you only get the standard 0.25% discount.
Already on auto pay? You don’t need to do anything. Your servicer applies the extra cut for you.
Who Qualifies for the 1% Auto Pay Reduction
The cut applies to Federal Direct Loans originated after July 1, 2012. That includes both student and parent borrowers.
Older loans, such as some FFEL loans, may not qualify. Confirm the exact cutoff with your servicer.
Already enrolled in auto pay? Your servicer adds an extra 0.75%. Combined with the usual 0.25%, your total reduction is 1%.
Not enrolled yet? You must sign up by the September 30 deadline.
Two special cases need extra steps:
- SAVE Plan borrowers: A court order ended SAVE in March 2026. Choose a new repayment plan first, then enroll in auto pay.
- Borrowers in default: Consolidate your eligible loans at StudentAid.gov. Apply for a new repayment plan. Then enroll in auto pay.
You must stay enrolled in auto pay to keep the reduction.
Before You Enroll
Auto pay pulls your payment from your bank account every month. Check these basics first:
- Keep enough money in the account on your due date.
- Confirm the payment amount your servicer will withdraw.
- Use a checking or savings account you plan to keep open.
A failed withdrawal can leave you with a missed payment. That defeats the purpose.
How to Enroll in Student Loan Auto Pay
Enrolling takes a few minutes. Do it now, not on deadline night, in case your servicer’s website has problems.
Auto pay is set up through your servicer’s account, not on StudentAid.gov itself. Use StudentAid.gov to find your servicer.
Don’t have an FSA ID yet? Create one at StudentAid.gov first.
- Go to StudentAid.gov and log in with your FSA ID.
- Find your loan servicer on your dashboard.
- Log in to your servicer’s website.
- Select “auto pay” from the navigation menu.
- Enter your checking or savings account information.
- Confirm your specific payment amounts.
- Save or screenshot your confirmation page.
Check your account a few days later. Auto pay should show as active.
Can’t find the auto pay option in the menu? Call your servicer before the deadline, not after.
Already Enrolled? Verify It Anyway
You don’t need to re-enroll. But confirm your auto pay is still active.
Log in to your servicer’s site. Make sure your bank account details are current and recent withdrawals went through.
If auto pay lapsed, re-enroll before September 30.
Watch for scams. Only use StudentAid.gov and your verified servicer’s site. Nobody should charge you a fee to enroll.
Never share your FSA ID password with a caller or texter.
How Much You’ll Actually Save
The 1% comes off your interest rate, not your loan balance. A 6% loan is treated like a 5% loan.
Here is an estimate for two common balances. It assumes a 6% rate and a steady 10-year payment. It also assumes the full 24 months of savings.
| Loan balance | First-month interest at 6% | First-month interest at 5% | Est. 24-month savings |
|---|---|---|---|
| $30,000 | $150.00 | $125.00 | about $585 |
| $50,000 | $250.00 | $208.33 | about $974 |
Those figures assume monthly payments of $333 and $555. Your savings will differ with your real rate and payment.
In the first month, that means about $25 less interest on $30,000. On $50,000, it means about $42 less.
Compared with the old 0.25% discount, the extra 0.75% adds roughly $437 on $30,000. On $50,000, it adds about $729.
Want your own number? Run your balance and rate through the Loan Simulator on StudentAid.gov.
What Happens After June 30, 2028
The 1% reduction is temporary. It ends June 30, 2028.
Unless the Department of Education acts again, your discount reverts to the standard 0.25%.
Your loan’s underlying rate doesn’t change. You simply lose the extra 0.75% cut.
In the $30,000 example, first-month interest would climb from $125.00 back to about $143.75.
Mark your calendar for mid-2028. Check StudentAid.gov for updates as that date gets closer.
How This Fits With RAP and Tiered Standard
Two new repayment plans became available July 1, 2026. They are the Repayment Assistance Plan (RAP) and the Tiered Standard plan.
RAP sets your payment based on your income and number of dependents.
Tiered Standard uses fixed terms of 10, 15, 20, or 25 years. Your total loan balance decides which term you get.
You can add auto pay to either plan. Your plan choice and your auto pay choice are separate decisions.
RAP also offers a match on on-time payments to keep interest from piling up. Auto pay helps you avoid missing one.
Choosing a plan? Compare your options in the Loan Simulator first.
The Department says only about 40% of borrowers in repayment use auto pay today. Before the pandemic, more than 80% did.
This temporary incentive is meant to close that gap.
FAQ
Does auto pay affect PSLF payment counts?
Not directly. Auto pay doesn’t add or remove Public Service Loan Forgiveness credit.
PSLF requires 120 on-time monthly payments. Your plan and employer must also qualify.
Auto pay simply helps you avoid missing a payment.
Can I cancel auto pay later?
Yes. Auto pay is optional, and you can cancel through your servicer.
But you must stay enrolled to keep the 1% reduction. Cancel, and you lose it.
The announcement doesn’t say whether re-enrolling after September 30 restores the 1%. Don’t count on it.
What if my servicer changed?
Log in to your current servicer’s website. Auto pay may not have carried over.
Check that it’s active. If it isn’t, enroll before September 30.
Don’t know your servicer? It’s listed on your StudentAid.gov dashboard.
Does the 1% cut apply to private student loans?
No. It applies to federal loans only.
Private lenders set their own auto pay discounts. Check with your lender directly.