Student Loan Autopay: Get a 1% Interest Rate Cut
Student Loan Autopay Interest Rate Reduction: How to Score a 1% Cut
- Enroll in autopay by Sept 30 to get 1% interest rate reduction until 2028.
- Autopay ensures on-time payments and provides peace of mind for borrowers.
- The 1% reduction is a temporary incentive to increase autopay enrollment.
On this week’s Money Matters Monday, host Olympia D. sat down with financial planner, educator, and FIRE expert Jackie Cummings Koski to break down some good news for student loan borrowers. If you’re working to pay down your loans, the Department of Education has an offer worth your attention.
What’s the New Autopay Offer?
The Department of Education is now offering a 1% interest rate reduction to borrowers who enroll in autopay. That’s a real boost from the usual quarter-percent (0.25%) discount that’s been on the table for years.
For anyone trying to knock out student loans faster, that extra savings adds up over time. But there are a few details you’ll want to know before you sign up.
Key Details You Need to Know
- Enroll by September 30th. You set this up through your student loan servicer, not automatically by making regular payments.
- The 1% offer is temporary. It runs through July 30, 2028. After that, borrowers still on autopay revert to the standard 0.25% discount.
- Already on autopay? Good news—you don’t have to do a thing. The 1% reduction applies automatically.
Why Is the Department of Education Doing This?
As Jackie explained, it comes down to getting paid. Before COVID hit in 2020, about 80% of borrowers were enrolled in autopay. That number has since dropped to just 40%. Like any creditor, the Department of Education wants consistent payments—so it’s offering the rate cut as an incentive to bring borrowers back to autopay.
Is Autopay Right for You?
Some borrowers aren’t comfortable with money being automatically drafted from their accounts. That’s a valid concern. But as Jackie pointed out, it’s a trade-off: opt out, and you give up that 1% reduction.
Beyond the rate cut, autopay carries another benefit—it helps ensure your payments arrive on time, so you never miss one. For most borrowers, that peace of mind combined with the interest savings makes this a smart move.
The Bottom Line
If you’re a student loan borrower, enrolling in autopay before September 30th could lower your interest rate by 1% through 2028. It’s a straightforward way to save money and stay on track with your payments.
Want more financial insights like this? You can find Jackie Cummings Koski at jackiecummingskoski.com, across social media, and on her podcast Catch Up to FI. And tune in for more Money Matters Monday, right here on 105.3 RNB.
