The Trump administration expanded the autopay interest rate discount for federal student loan borrowers, temporarily lowering rates for those who enroll in automatic payment plans.
Borrowers who set up autopay on federal student loans now receive a 0.25 percent interest rate reduction, according to the announcement. This discount applies to Direct Loans, PLUS loans, and consolidation loans held by the Department of Education.
The benefit targets borrowers seeking to lock in savings while managing monthly payments. Autopay enrollment simplifies repayment by automatically deducting loan payments from a bank account each month, reducing missed payments and late fees.
Federal student loan interest rates vary by loan type. As of the 2024-2025 academic year, undergraduate Direct Loans carried a 6.53 percent interest rate. Graduate loans were at 8.23 percent, and PLUS loans at 9.23 percent. The autopay discount reduces these rates immediately.
To qualify, borrowers must actively enroll in autopay through their loan servicer. The major servicers include Nelnet, Mohela, and Great Lakes. Enrollment typically takes minutes through each servicer's online portal or customer service.
The discount remains permanent for borrowers who maintain active autopay enrollment. If a borrower cancels autopay, they lose the rate reduction. Restarting autopay later restores the discount.
This move reflects broader administration efforts to ease borrower debt loads without relying on large-scale forgiveness programs. The announcement comes as federal student loan payments resumed following the pandemic payment pause that ended in October 2023.
For borrowers with substantial loan balances, even 0.25 percent compounds meaningfully over time. A borrower with $30,000 in Direct Loans at 6.53 percent who pays over 10 years saves approximately $380 by using