US Education Department offers two-year trim on student loan interest rates

The U.S. Education Department will temporarily reduce student loan interest rates by one percentage point for borrowers using auto pay from July 2026 to June 2028. Existing auto pay users will receive an additional 0.75 percentage point reduction, and the policy aims to help borrowers pay down balances and strengthen the federal loan portfolio. The benefit is estimated to cost the agency $6 billion and applies to loans originated after July 1, 2012.