How Long Can Student Loan Borrowers Keep a Lower Interest Rate?

Signing up for auto pay can lower a student loan rate by 1% for a limited period, but borrowers must meet all eligibility rules.

Borrowers can still take advantage of a student loan interest-rate reduction if they enroll in on-time payments.

According to the Department of Education, borrowers who are already enrolled in auto pay or who newly enroll may qualify for the lower rate. Here is what to know.

How much can the interest rate be reduced?

In most cases, servicers give auto-pay participants a 0.25% interest-rate reduction.

Under this temporary offer, eligible borrowers can get their rate cut by 1% for a limited time.

What is the deadline to qualify?

Borrowers must be enrolled in auto pay by the end of the year.

How long does the lower rate last?

The 1% reduction is available through June 30, 2028 for borrowers who qualify.

To keep the benefit, borrowers must stay enrolled in auto pay and continue meeting all eligibility requirements.

Who is eligible for the reduction?

In addition to being in auto pay, the Department of Education said the reduced rate applies to borrowers whose loans originated after July 2012.

That includes borrowers in the SAVE Plan, which is now defunct, as well as those in other lawful repayment plans. It also includes borrowers who are in default if they bring their loans back into good standing.