The Trump administration announced an extension to the enrollment deadline for a federal student loan interest rate discount program. Borrowers seeking to reduce their interest rates by 1 percentage point through automatic payment enrollment now have until the end of the year to sign up, rather than the previously announced cutoff date of the following day. The extended benefit will remain in effect through June 30, 2028.
According to the Department of Education, approximately 2 million federal student loan borrowers have already enrolled in the automatic payment program since the discount became available over the summer. The administration noted that borrowers who typically use automatic payments have historically received a 0.25 percentage point discount, though this new program offers a larger reduction.
The discount applies only to specific loan types within the Direct Loan program, including Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, and Parent PLUS Loans. Federal Family Education Loans and private student loans are ineligible for the temporary reduced rate. Eligible loans must have been disbursed on or after July 1, 2012, and must be in good standing. Borrowers can enroll through their loan servicer’s website by locating payment management options and providing banking information. Information about loan servicers and disbursement dates is available through StudentAid.gov.
The student loan sector represents a substantial portion of American household debt, with more than 42 million citizens carrying outstanding loans totaling in excess of 1.7 trillion dollars. The current average interest rate on federal student loans stands at 6.54 percent.
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