The Trump administration announced Thursday it will cut federal student loan interest rates by one percentage point for borrowers who enroll in automatic payments, offering temporary relief to Americans carrying $1.6 trillion in education debt.
The discount takes effect July 1 and runs through June 30, 2028. Borrowers have until September 30 to sign up for autopay to qualify. Under Secretary of Education Nicholas Kent said the move aims to “make student loan repayment easier than ever” as the government prepares a major overhaul of the federal loan system.
Low Autopay Enrollment Creates Opportunity
Only 40% of borrowers in active repayment currently use autopay, down sharply from over 80% before the COVID pandemic. That leaves 25 million of the 42 million federal loan holders potentially eligible for the rate cut if they act by the deadline.
For a borrower carrying $30,000 in loans at a typical 5% interest rate, the one-point reduction would save roughly $300 annually, or about $900 over the three-year discount period. Those savings compound for borrowers with larger balances or higher starting rates.
Major Changes Coming This Summer
The rate cut arrives as borrowers face sweeping changes from Trump’s recent budget legislation. The law narrows access to income-driven repayment plans that previously allowed millions to cap monthly payments based on earnings. It also scales back other relief measures established during and after the pandemic.
The timing suggests the administration is using the autopay discount to soften the blow of tougher repayment requirements taking effect in coming months. Autopay reduces default rates and administrative costs, making it attractive to the Education Department even with the revenue loss from lower interest.
Borrowers should compare the autopay discount against their current payment strategy, particularly those relying on income-driven plans that may become less favorable under the new rules. The 2028 end date means the discount expires before the next presidential term, leaving future relief uncertain.
Key Points
- Federal student loan borrowers who enroll in autopay by September 30 get a one percentage point interest rate reduction through June 2028
- Only 40% of active borrowers currently use autopay, down from 80% before COVID, leaving 25 million potentially eligible
- The discount arrives as new Trump legislation narrows income-driven repayment plans and other relief measures starting this summer
https://www.cnbc.com/2026/06/18/trump-student-loan-autopay-interest-rate-discount.html – June 18, 2026
