AI-written summary of reporting by New York Post. No human editor reviewed this. AI can misread or omit facts — read the original, linked below.
ABSTRACT

The U.S. Department of Education has extended the deadline for federal student loan borrowers to enroll in auto pay and receive a 1% interest rate reduction to Dec. 31, from Sept. 30. The department said the reduction will last through June 2028.

New York Post

Student loan auto pay enrollment deadline extended to Dec. 31 for 1% rate cut

Student loan auto pay enrollment deadline extended to Dec. 31 for 1% rate cut
Oct 6, 2026, 4:55 PM

The U.S. Department of Education has extended the deadline for federal student loan borrowers to enroll in auto pay and receive a 1% interest rate reduction to Dec. 31, from Sept. 30. The department said the reduction will last through June 2028.

Context

Borrowers who already use auto pay receive an interest-rate discount of 0.25%, so the new reduction adds 0.75 percentage points. Borrowers who were enrolled in auto pay before the reduction was announced in July have had their interest rate automatically reduced by 1%, according to the Education Department.

The department said the temporary benefit is meant to support borrowers, along with those returning to repayment, and to ensure they can stay on top of the new Repayment Assistance Plan, which requires on-time payments. Since the reduction was announced this summer, nearly 2 million borrowers have enrolled in auto pay.

Around 9 million Americans were in default on their federal student loans as of June, according to the Education Department, and hundreds of thousands more are behind on loan payments and at risk of default this year. Borrowers are considered in default when they are at least 270 days behind on payments. Involuntary collections on federal student loans remain on hold; the Trump administration announced earlier this year that it is delaying plans to withhold pay from borrowers who default on their payments.

To enroll, borrowers log in to their student loan servicer account, select auto pay and enter bank information so the monthly payment is withdrawn automatically from a checking or savings account. Borrowers in default must log in to studentaid.gov and consolidate eligible loans before signing up for auto pay. Consolidation combines multiple federal student loans into a single loan with a fixed interest rate and a single monthly payment, typically takes around 60 days and can be done only once. Defaulted borrowers can also contact their loan holder to apply for a loan rehabilitation program, in which they are enrolled in a reduced payment plan and wage garnishment ends after five successful payments.

All Perspectives
U.S. Department of Education: The department said the temporary interest reduction is meant to support borrowers, along with those who are returning to repayment, and to ensure they can stay on top of the new Repayment Assistance Plan that requires on-time payments. It said borrowers already enrolled in auto pay before the July announcement had their interest rate automatically reduced by 1%.
Lesley J. Turner, University of Chicago: Turner, an associate professor of public policy, said the interest reduction can benefit borrowers who have large balances and are on fixed payments. "For a limited time, borrowers are now able to get a full percentage point reduction in their interest rate if they sign up for auto debit," she said. "So this is a quadrupling of the earlier benefit. It's a pretty big benefit, especially for borrowers who have large balances." She also said auto pay is a good way to stay on top of student loans even without the rate reduction: "We all know life gets busy and if you have to log in every month and manually make your payment there may be a chance that you forget and then you end up having your loans go delinquent."
Gaps & Unknowns
  • The source does not state how the legislation referenced in a linked article, the "Big Beautiful Bill," affects student loans.
  • The source does not state how many borrowers in total are eligible for the interest reduction or what the benefit costs.
  • The source does not give the specific date in July when the interest reduction was announced, saying only that it was announced in the summer.
  • The source does not state the interest rates borrowers currently pay or how those rates vary by loan type.
  • The source does not state whether the Dec. 31 enrollment deadline could be extended again.
  • The source does not state when the suspension of involuntary collections is scheduled to end.
Sources & Further Reading
  1. New York Post — original

Read the original at New York Post

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