Until now, the Education Department told borrowers they must enroll by Wednesday's close of business to secure the 1-point reduction through autopay. On Tuesday, the administration said it will extend that deadline to Dec. 31. Sign up by then and the enhanced reduction will stay in effect through June 30, 2028. That is a much richer perk than the usual 0.25 percentage point autopay discount borrowers typically get.
Small changes in interest can add up. Higher education analyst Mark Kantrowitz puts the current average federal student loan rate at 6.54%, so trimming a full point can meaningfully lower what you pay.
Kantrowitz said the eligible debt has to be part of the Direct Loan program. Eligible loans span Direct Subsidized, Direct Unsubsidized, Direct PLUS, as well as Direct Consolidation. Parents with PLUS loans also qualify when those debts are in the Direct Loan program.
Federal Family Education Loans are not included in this temporary rate cut, and private student loans are out as well. Loans must have a first disbursement dated July 1, 2012 or later, and they must be in good standing. You can look up your disbursement dates at StudentAid.gov or check with your servicer.
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Scott Buchanan, who leads the Student Loan Servicing Alliance as its executive director, said borrowers sign up for autopay through their servicer's website, most often in a section labeled something like "manage payments." You will typically provide your bank account details and a few other basics, and submitting the request is quick. "It takes a minute," he said.
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