The U.S. Department of Education announced an extension of the enrollment deadline for a federal student loan interest rate discount program. Borrowers previously had until the end of the day on Wednesday to register, but the administration has now extended that timeline to Dec. 31. Once enrolled in automatic payments, borrowers will receive the benefit through June 30, 2028.
The interest rate reduction offers a 1 percentage point discount on qualifying federal student loans. Since the program became available over the summer, nearly 2 million borrowers have already enrolled in autopay to access the reduced rate. The program comes as student loan debt remains a significant financial burden for millions of Americans, with more than 42 million carrying federal student loans totaling over $1.7 trillion in outstanding debt. The current average interest rate on federal student loans stands at 6.54%.
To qualify for the discount, borrowers must meet several requirements. Their loans must be from the Direct Loan program, which includes Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, and Parent PLUS loans if they are part of the Direct Loan program. Federal Family Education Loans and private student loans are not eligible. Additionally, loans must have been disbursed on or after July 1, 2012, and must be in good standing.
Borrowers can enroll in automatic payments through their loan servicer’s website by locating a tab labeled “manage payments” or similar. The enrollment process requires providing bank account information and other basic details and typically takes minimal time to complete. Those unsure of their loan servicer can find this information on StudentAid.gov.
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