U.S. Department of Education extends student loan auto pay deadline

The U.S. Department of Education has extended the deadline for student loan borrowers to enroll in auto pay to receive a 1% interest rate reduction. While the original deadline was September 30, the extension allows borrowers until the end of 2026 to qualify for the benefit, which is scheduled to last through June 2028.

Borrowers currently using auto pay receive a 0.25% discount, meaning the new reduction provides an additional 0.75% off the interest rate. This initiative aims to support borrowers returning to repayment and encourage compliance with the new Repayment Assistance Plan, which requires on-time payments.

Lesley J. Turner, an associate professor of public policy at the University of Chicago, noted that the benefit is particularly significant for borrowers with large balances on fixed payments, describing it as a “quadrupling of the earlier benefit.” As of June, approximately 9 million Americans were in default on federal student loans, with hundreds of thousands more at risk of default.