Full Breakdown
Trump Administration Extends Deadline for Federal Student-Loan Interest Discount
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Extension of the Interest-Rate Discount
The U.S. Department of Education announced on Tuesday that the deadline for borrowers to enroll in automatic payments—and thereby receive a one-percentage-point reduction in their federal student-loan interest rate—has been moved to December 31, 2026. The benefit, once activated, will remain in effect through June 30, 2028. The prior deadline had been September 30. Education Secretary Linda McMahon disclosed the change during a White House press briefing.
Background of the Discount Program
The discount is part of the administration’s Repayment Assistance Plan (RAP), introduced on July 1 as a replacement for the previous SAVE plan. Under RAP, borrowers who enroll in autopay receive an automatic 0.25-percentage-point reduction; the new extension adds an additional 0.75-percentage-point cut for those who sign up by the deadline. The reduction applies only to direct federal loans that originated after July 1, 2012. Borrowers who are in default are excluded until they regain good standing.
Data and Scope of the Benefit
- Nearly 2 million borrowers have enrolled in autopay since the program’s launch this summer.
- More than 42 million Americans carry student loans, with total outstanding debt exceeding $1.7 trillion.
- The current average interest rate on federal student loans is 6.54 % (higher rates range from 6.5 % to over 9 %).
- The combined discount (0.25 % + 0.75 %) lowers the effective rate by one full percentage point for eligible borrowers.
Official Statements & Responses
He added that the temporary benefit is designed to improve repayment rates and the overall health of the federal loan portfolio. The Department of Education’s press release framed the change as a measure to increase affordability for borrowers who have signed up for autopay.
Verbatim Quotes
- “We are excited to see millions of borrowers take advantage of this temporary benefit, which is already driving up repayment rates and improving the overall health of the federal student loan portfolio,” — Undersecretary, of Education Nicholas Kent