The Feds Are Handing Out a 1% Student Loan Rate Cut. Take Five Minutes and Claim It.

Update, September 30, 2026: Scratch the countdown below. On September 29 the Education Department extended the enrollment deadline from September 30 to December 31, 2026, per the National Consumer Law Center’s Student Loan Borrower Assistance Project and Yahoo Finance. The rest holds: a full point off, Direct Loans disbursed on or after July 1, 2012, and an end date of June 30, 2028. That end date is the part that didn’t move, so waiting until December just means fewer months of the discount. The billing-cycle advice still stands: enroll well before the cutoff and check that it posted.

Update, September 21, 2026: Nine days left. We pulled the servicer page again this morning and nothing has moved: “Enroll by 11:59 p.m. ET on Sept. 30, 2026,” a 1% reduction, running through June 30, 2028, on Direct Loans disbursed on or after July 1, 2012. What has changed is the room you have left. Enrollment is not a switch that flips the moment you click it; it has to clear a billing cycle, and a rejected account number or a failed bank verification in the last week of September leaves you nothing to fix it with. If you have been meaning to do this since July, do it today and check back that it posted.

If you have a federal Direct student loan, you can drop your interest rate by a full percentage point for the next two years by turning on auto-pay. You have until December 31 to enroll. If you were already on auto-pay, you got the rate cut automatically on July 1. Log in and confirm it.

The Department of Education announced the change on June 18, 2026. The old 0.25% auto-pay discount, which has been on the books for a decade, is temporarily stacked with an extra 0.75%. That brings the total interest reduction to 1% through June 30, 2028. It applies to Direct Loans disbursed on or after July 1, 2012, which covers almost every current borrower.

Under Secretary Nicholas Kent framed the move as a way to “drive up repayment rates and significantly improve the overall health of the federal student loan portfolio.” Translation: fewer defaults, fewer bad loans on the government’s books. Whatever the motive, the check clears the same way for you.

Here’s the catch worth knowing. This only helps loans in active repayment. Loans in default do not qualify. Older FFEL and Perkins loans are not on the list either. And if you were on the now-dead SAVE plan, you have to pick a new legal repayment plan first (RAP, IBR, or Tiered Standard), then set up auto-pay against that plan.

The math

On a $30,000 balance, a one-point rate cut saves about $300 a year in interest, or $600 over the two-year window. On $50,000, it’s roughly $500 a year, or $1,000 over the window. On a standard 10-year plan, your monthly bill does not shrink; more of the same payment goes to principal, so the loan pays off faster and you owe less total. On the new Repayment Assistance Plan, where the bill is a share of your income, the interest savings show up as real cash flow.

Verdict: smart. Free money for a five-minute task.

Do this now

Log into your servicer’s site (MOHELA, Nelnet, Aidvantage, or EDFinancial) this week. Find the auto-pay setup, usually under “Payments and Billing.” Point it at a checking account with a stable balance, one you know will not bounce. Three consecutive returned payments and the servicer pulls the enrollment, along with both the temporary 1% and the standard 0.25%.

Confirm the first automatic pull processes, then check your rate on the servicer’s dashboard. It should be one percentage point below your loan’s stated rate.

If you were on SAVE, do the plan selection first. Servicers cannot apply an auto-pay discount to a borrower without an active repayment plan.

Deadline is December 31, 2026, moved from September 30. Not optional if you want the full point.

What’s the fine print

The temporary 1% ends June 30, 2028, and the standard 0.25% auto-pay discount continues under the older rule. Existing auto-pay enrollees did not need to do anything on July 1; the extra 0.75% was credited automatically. During any period of deferment or forbearance, auto-pay is not in effect, so the discount does not apply. When repayment resumes, so does the discount, as long as auto-pay is still on file.

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