Auto-Pay Interest Cut Extends to 2028 as New Loan Plans Debut
The Education Department announced a 1% auto-pay interest reduction on federal Direct Loans starting July 1 and lasting through June 30, 2028, for borrowers who enroll by Sept 30, 2026 or are already enrolled. Two new repayment options, RAP and Tiered Standard, will launch July 1, 2026 to simplify payments: RAP uses income-based calculations with an on-time payment match to prevent interest accrual and maintain progress toward forgiveness, and the Tiered Standard plan offers fixed terms of 10–25 years. Auto pay remains the easiest way to access these benefits, with default borrowers required to consolidate and select a plan before enrolling. Details and enrollment steps are provided by the Department.