How to Qualify for Trump Admin’s New Student Loan Interest Rate Cut
Summary
The Education Department has announced a temporary 1% cut in interest rates for certain federal student loans starting July 1. To qualify for the reduced rate, borrowers must have Direct Loans issued after July 1, 2012, and enroll in automatic payments.Key Facts
- The interest rate cut applies from July 1, 2026, to June 30, 2028.
- Borrowers must use automatic payments (auto pay) to get the 1% reduction.
- Only loans disbursed after July 1, 2012, qualify for the cut.
- Borrowers already on auto pay currently get a 0.25% discount, which will increase to 1%.
- About 40% of federal loan borrowers are currently enrolled in auto pay.
- Borrowers in default must consolidate their loans and reenter repayment to qualify.
- Income-driven repayment plans will not reduce monthly payments but will lower interest paid over time.
- New fixed interest rates for federal student loans were set for 2025-2026, with undergraduates facing 6.39% and graduate students 7.94% or higher.
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