Starting from July 1, 2026, student loan borrowers can get a 1% discount on their repayments by enrolling in the ‘autopay’ method. The previous standard discount rate for setting up the autopay method was 0.25%, and the Department of Education announced that it is temporarily boosting the concession to 1%. The move is to incentivize borrowers to get back into stable repayment habits and boost autopay enrollment.
The Department of Education is offering a 1% discount for student loan borrowers as the autopay enrollment plummeted by 80%. This leads to a risk of payment defaults and makes borrowers delinquent by failing to perform their prepayment duties. This also helps borrowers to remain financially disciplined by not committing the amount to other means.
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Student Loan Interest Rate Discount: When Is the Deadline For Enrollment?
The deadline to enroll in the autopay option to avail the 1% student loan rate discount is September 30, 2026. If you miss the deadline, the standard 0.25% will be automatically applied and continued for the rest of the tenure. The 1% discount applies to both student and Parent PLUS loans. However, private student loans are excluded from this policy. It also helps the loan to be cleared faster by a few months and remain debt-free.
Also, borrowers who have defaulted on their student loan prepayments in the last 270+ days will not be eligible to apply for the 1% discount. In addition, for borrowers who have already enabled the autopay option, the system will automatically upgrade it to the 1% zone. Only those who have not applied for the option need to do so by the end of September this year. A 1% discount will lead to steady savings as it attacks the principal amount. This stabilizes the overall $1.7 trillion federal student debt portfolio.