Some student loan borrowers will be eligible for a discount according to the U.S. Department of Education.
The agency said that borrowers who are on auto pay can get a 1% interest rate reduction starting July 1 through June 30, 2028.
If borrowers are not already enrolled, they’re not out of luck. They can enroll by Sept. 30 to take advantage.
It is part of President Donald Trump’s Working Families Tax Cut Act.
Along with the discount, two new repayment plans will roll out next month: the Repayment Assistance Plan (RAP), which is income-driven, and the Tiered Standard Repayment Plan.
“Borrowers in RAP can receive a match on their on-time payments to ensure interest does not accrue and balances decline every month. Eligible borrowers making on-time, monthly payments can also qualify for Public Service Loan Forgiveness (PSLF), which discharges certain loans after 120 payments,” the Department of Education said in a news release.
Auto pay, according to the department, helps borrowers not miss payments.
The DoE said that before the COVID-19 pandemic, more than 80% borrowers were enrolled in autopayment, but now only 40% are.
To enroll in auto pay, you have to go into your account through your student loan servicer and select “auto pay,” enter your bank account information, and confirm payment amounts.
If you’re in default, you have to log into StudentAid.gov to consolidate loans, then apply for a new payment plan before enrolling in auto pay.
For more information, click here.
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