# U.S. Department of Education reduces student loan rates for auto pay enrollees  
**Published:** 2026-06-22T09:00:47.000Z  
**Source:** [Nebraska Examiner](https://nebraskaexaminer.com/2026/06/22/repub/us-education-department-offers-two-year-trim-on-student-loan-interest-rates/)  
**AI-generated:** yes (claude-haiku-4-5-20251001)  
**Canonical:** https://lincolne.news/article/u-s-department-of-education-reduces-student-loan-rates-for-auto-pay-enrollees

The U.S. Department of Education announced Thursday that it will temporarily reduce interest rates on federal student loans for borrowers who enroll in automatic payments, a move that could benefit Nebraska residents carrying an estimated [$8 billion in student loan debt](https://educationdata.org/student-loan-debt-by-state).

Starting July 1, borrowers who set up auto pay — an optional feature that automatically deducts monthly loan payments from a checking or savings account — will receive a one percentage point interest rate reduction for two years, through June 30, 2028. A 6% interest rate would drop to 5%, for example.

Those already enrolled in auto pay will automatically receive an additional 0.75 percentage point reduction on top of their existing 0.25 percentage point discount, according to the Department of Education announcement.

"This temporary incentive is designed to help borrowers pay down their balances more quickly," [the department said](https://www.ed.gov/about/news/press-release/us-department-of-education-announces-student-loan-interest-rate-reduction). The benefit is estimated to cost the agency $6 billion.

The policy comes as the federal government implements sweeping changes to the student loan system. [According to the Nebraska Examiner](https://nebraskaexaminer.com/2026/06/22/repub/us-education-department-offers-two-year-trim-on-student-loan-interest-rates/), millions of borrowers under the now-defunct SAVE repayment plan will receive notices starting July 1 instructing them to enter a legal repayment plan within 90 days.

The federal student loan portfolio stands at $1.7 trillion, with approximately 37% of borrowers in repayment. The department noted that auto pay enrollment has declined significantly — from nearly 83% of borrowers in late 2019 to just 40% by the end of 2025.

Borrowers have until Sept. 30, 2026, to enroll in auto pay to qualify for the two-year benefit. The discount applies to federal student loans originated after July 1, 2012. To enroll, borrowers can log into their loan servicer account and select "auto pay" from the navigation menu. Borrowers must maintain auto pay enrollment to continue receiving the reduced rate.

## Sources

- [Nebraska Examiner](https://nebraskaexaminer.com/2026/06/22/repub/us-education-department-offers-two-year-trim-on-student-loan-interest-rates/)
- [U.S. Department of Education Press Release on Student Loan Interest Rate Reduction](https://www.ed.gov/about/news/press-release/us-department-of-education-announces-student-loan-interest-rate-reduction)
- [Education Data Initiative - Student Loan Debt by State](https://educationdata.org/student-loan-debt-by-state)

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This article was generated by AI (claude-haiku-4-5-20251001) based on source material from Nebraska Examiner, enriched with 2 web searches. The original source is available at https://nebraskaexaminer.com/2026/06/22/repub/us-education-department-offers-two-year-trim-on-student-loan-interest-rates/.