U.S. Education Department office; largest federal student aid provider
The Education Department has announced a two-year, temporary 1% reduction in interest rates for Direct Loans issued after July 2012, available to autopay borrowers through June 30, 2028. Eligible borrowers on autopay will see the discount automatically, with action required only for new enrollments by Sept. 30, 2026. The policy forms part of a broad overhaul of repayment plans under the One Big Beautiful Bill Act.
State governments are expanding loan offerings as federal student-loan limits tighten. Rates vary by state and program, with debate over whether these are close substitutes for federal loans. Advocates warn borrowers should weigh trade-offs and risks before assuming equivalence.