Education Department Extends 1% Student Loan Auto Pay Discount Deadline To December 31

The U.S. Department of Education announced on September 29, 2026 that it was extending the enrollment window for its temporary 1% student loan interest rate reduction by three months. Borrowers who enroll in auto pay by December 31, 2026, or who are already enrolled, keep the reduced rate through June 30, 2028. The original deadline would have closed at the end of September. The 1% discount replaced the old 0.25% auto pay discount on July 1, 2026 for eligible borrowers.

The Department says nearly 2 million borrowers have signed up for auto pay since the benefit was announced this summer. Under Secretary of Education Nicholas Kent said in the statement that the discount is already lifting repayment rates across the federal portfolio, which has been struggling as 9.3 million borrowers sit in default.