Chicago – June 20, 2026
The Trump administration has announced a temporary reduction in federal student loan interest rates, cutting borrowing costs by 1 percentage point for eligible borrowers who enroll in automatic payments. The Education Department revealed the move on Thursday, framing it as part of a broader strategy to enhance higher education affordability amid rising delinquency rates.
The reduction takes effect July 1, 2026, and will remain in place through June 30, 2028, spanning two years. To qualify, borrowers must have Federal Direct Loans issued after July 1, 2012 and enroll in autopay by September 30, 2026. Those already enrolled will automatically receive a 0.75% reduction, since they already benefit from a 0.25% autopay discount.
The initiative targets struggling borrowers as delinquencies climb to 10.3%—the highest share in six years and a twenty-fold spike since mid-2024. The program is estimated to cost $6 billion and will reduce undergraduate rates from 6.39% to 5.39% for eligible autopay enrollees. The reduction does not apply to new loans issued for the upcoming school year, which will carry slightly higher rates.
