A Full Point Off Your Student Loan Rate Is Worth About $378 a Year. You Now Have Until December 31.

Update, September 30, 2026: The door stayed open. On September 29 the Education Department pushed the enrollment deadline from September 30 to December 31, 2026, according to the National Consumer Law Center’s Student Loan Borrower Assistance Project and Yahoo Finance. Nothing else moved: it’s still a full point, still Direct Loans disbursed on or after July 1, 2012, and it still ends June 30, 2028. Under Secretary Nicholas Kent said the benefit is “already driving up repayment rates,” and Yahoo reports nearly 2 million borrowers have enrolled since the summer. Here’s what the extension doesn’t change: the end date. At $378 a year, every month you sit out costs you about $31 you never get back. The deadline and the steps below are updated.

If you have federal Direct Loans and you are not on auto pay, you have until December 31 to turn it on. Do that and your interest rate drops a full percentage point through June 30, 2028.

On the average balance in repayment, that is about $378 a year. For linking a bank account.

The auto pay discount itself is not new. Let your servicer pull the payment automatically and you have always gotten 0.25 percentage points off. A quarter point on a student loan is a rounding error, and borrowers treated it like one.

On July 1 the Education Department made it a full point. Four times the discount, same button.

The catch is the calendar. The bigger version is temporary, it expires June 30, 2028, and then the discount goes back to 0.25. If you are not already enrolled, December 31 is the door now. Borrowers who were already on auto pay do not need to do anything at all. Their servicers are adding the extra 0.75 points for them.

Here is what it is actually worth. Federal Student Aid posted its quarterly portfolio numbers on September 22. As of June 30, 17.4 million people were in active repayment holding $658 billion. That is an average balance of $37,816.

One percentage point on $37,816 is $378 a year. Across the 21 months left in the program, roughly $660, and a bit less in practice because the balance shrinks while you pay it.

The old quarter point on that same balance was worth $95 a year.

Nothing about the button changed. The Department just decided it was worth four times more. The end date is fixed, so the longer you wait to press it, the less of that $660 you collect.

Log in to your servicer’s site this week. Find the payments section, turn on auto pay, and give it a checking or savings account. It takes about ten minutes. The new deadline is December 31, but the $31 a month you lose by waiting starts now.

Two things to know once it is running. The reduction pauses if your loans go into deferment or forbearance and picks back up on the other side. And MOHELA’s terms say auto pay terminates if three payments in a row are returned for insufficient funds, taking the rate cut with it. Keep a buffer in whatever account you link.

Eligibility is narrower than the headline. Direct Loans disbursed on or after July 1, 2012 qualify. Older FFEL paper does not.

One group should check the math before celebrating. If you are on the new Repayment Assistance Plan and your monthly payment is smaller than the interest piling up, Student Loan Planner points out that the rate cut buys you nothing, because RAP waives the unpaid interest either way. Compare your payment to your accrued interest before you count the $378.

Do it anyway for the second reason. That same FSA report says 3.5 million people in active repayment are more than 30 days late, and 1.5 million of them are close enough to default to be flagged for it. Auto pay is the cheapest protection against joining them, and if you are chasing forgiveness it matters more, because a payment one day late no longer counts toward PSLF.

Run your number through the loan calculator if you want to see the point in dollars on your own balance, and our education hub covers which repayment plan you should be on once the rate is settled.

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