U.S. Education Secretary Linda McMahon speaks during a press briefing at the White House in Washington, D.C., U.S., November 20, 2025.
Evelyn Hockstein | Reuters
The Trump administration announced on Tuesday that it will extend the deadline for federal student loan borrowers to receive a reduction of 1 percentage point on their interest rate.
Previously, the U.S. Department of Education indicated borrowers had until the end of the day on Wednesday to sign up for automatic payments and secure the reduced rate. The new deadline is now December 31.
Once enrolled, the benefit will remain in effect through June 30, 2028.
Nearly 2 million federal student loan borrowers have enrolled in autopay since the discount was made available over the summer, according to the department.
Typically, automatic payments for federal loans have included a 0.25 percentage point discount.
Over 42 million Americans hold student loans, with total outstanding debt surpassing $1.7 trillion. The current average interest rate on federal student loans stands at 6.54%, as reported by higher education expert Mark Kantrowitz.
Eligibility for Federal Student Loan Discounts
To be eligible for the interest rate reduction, borrowers must have Direct Loans, according to Kantrowitz. This includes Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Parent PLUS borrowers are also eligible, provided their loans are from the Direct Loan program.
Federal Family Education Loan (FFEL) borrowers are not eligible for the temporary reduced rate. Additionally, the benefit does not extend to private student loans.
Borrowers must also confirm their loans were disbursed on or after July 1, 2012. Disbursement dates can be verified through Studentaid.gov or with the borrower’s loan servicer. Loans must also be in good standing to qualify.
Enrollment Process for Automatic Payments
Student loan borrowers can enroll in automatic payments through their loan servicer’s website, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal loan servicers. He advises borrowers to look for a tab labeled “Manage Payments” or a similar designation.
The enrollment process typically requires providing bank account details and other information, but it can be completed quickly, Buchanan noted: “It takes a minute.”
If borrowers are unsure which company manages their student loans or need contact information for their servicer, they can access this information through StudentAid.gov.