The U.S. Department of Education announced an extension to the enrollment period for a federal student loan interest rate reduction program. The original deadline was the end of the day on Wednesday, but borrowers now have until December 31 to sign up for automatic payments and qualify for the discount.
The 1 percentage point reduction will remain active through June 30, 2028, once borrowers enroll. According to the department, approximately 2 million federal student loan borrowers have already enrolled in the program since it became available over the summer. For context, more than 42 million Americans currently carry student loan debt totaling over $1.7 trillion, with the average federal student loan interest rate at 6.54%.
The discount applies specifically to Direct Loan program borrowers, which includes Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Parent PLUS borrowers are also eligible if their loans are from the Direct Loan program. Federal Family Education Loans and private student loans do not qualify for the temporary rate reduction. Additionally, loans must have been disbursed on or after July 1, 2012, and must be in good standing to qualify.
Borrowers can enroll through their loan servicer’s website by locating the “manage payments” section or equivalent option. The enrollment process requires basic information such as a bank account number and typically takes minimal time to complete. Borrowers unsure about their loan servicer can access this information through StudentAid.gov.
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