Evelyn Hockstein | Reuters
Previously, the U.S. Department of Education said borrowers had until the end of the day on Wednesday to sign up for the automatic payments and benefit from the reduced rate. Now it says federal student loan holders will have until Dec. 31.
Once borrowers enroll, the benefit will last through June 30, 2028.
Nearly 2 million federal student loan borrowers have signed up for autopay since the discount became available over the summer, the department said.
Typically, borrowers on autopay have had access to a 0.25 percentage point discount.
More than 42 million Americans carry student loans, and the outstanding debt exceeds $1.7 trillion. The current average interest rate on federal student loans is 6.54%, according to higher education expert Mark Kantrowitz.
Most federal student loans qualify
Federal Family Education Loans, or FFEL, aren’t eligible for the temporary reduced rate. As the federal government is offering the discount, the benefit does not extend to private student loans.
In addition, your loans must have been disbursed on or after July 1, 2012, Kantrowitz said. You can find your loan disbursement dates at Studentaid.gov or with your servicer. Your loans must also be in good standing to qualify.
How to sign up for autopay
Student loan borrowers can enroll in automatic payments through their loan servicer’s website, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. He said to look for a tab labeled “manage payments” or something similar.
You’ll typically need to provide your bank account number and a few other details, but it’s quick to submit a request, Buchanan said: “It takes a minute.”
If you don’t know which company is managing your student loans on behalf of the Education Department, or need the company’s contact information, you can get that information from StudentAid.gov.
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