Deadline looms for student loan borrowers to cut their interest rate
The reality of college tuition debt was on display at the Northeastern University graduation at the TD Garden on May 03, 2019. (Photo by Suzanne Kreiter/The Boston Globe via Getty Images)
Time is running out for people to save a little extra money on their student loans. The U.S. Department of Education is warning that an initiative that allows individuals to cut their interest rate temporarily ends this week.
Big picture view:
The federal agency warned those who are making payments manually every month that they only have until Wednesday, September 30, to take advantage of an increased interest rate reduction by signing up for automatic payments.
What they're saying:
"Auto pay saves you time and money over the life of your federal student loan, and it helps you make sure your payment is on time every month," the Education Department wrote in a post on its website.
By the numbers:
The program, which has been in effect since July 1, 2026, allows borrowers to cut their interest rate by 1% by enrolling in autopay, quadrupling the 0.25% that individuals would normally save.
The savings are not permanent, though. The Education Department pointed out that the increased interest rate reduction is scheduled to revert to the normal level on June 30, 2028. To maintain the lower interest rate for that entire time, the borrower would need to have autopay activated the entire time and must continue to make payments. Any switch to forbearance or deferment would also end the rate reduction.
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What you can do:
Anyone who already had autopay set up is currently receiving the rate reduction, the Education Department noted. Those who want to enroll can do so through their loan service provider, the links for which are listed below.
The Source: Information for this article was taken from the U.S. Department of Education. This story was reported from Orlando.