Nearly 2 million borrowers have opted into the Department of Education’s four-fold increase in savings you get for signing up for autopay on your student loans, a benefit that was announced in June this year.
The program was only supposed to run through September 30, but due to its success, the Department has extended the enrollment period for this program by an additional three months, through December 31, 2026.
Under Secretary of Education Nicholas Kent said in a press release from September 29, “we are excited to see millions of borrowers take advantage of this temporary benefit, which is already driving up repayment rates and improving the overall health of the federal student loan portfolio.”
In addition to the cash savings, enrolling in autopay means you won’t lose eligibility for repayment assistance or forgiveness programs like the new Repayment Assistance Plan (RAP) and Public Service Loan Forgiveness (PSLF) that requires on-time payments.
The RAP program, which was passed into law in 2025 and went into effect on July 1, 2026, has provisions for lower-income borrowers that reduces the amount of interest you pay and guarantees that your principal is reduced with every payment. For example, If a borrower’s calculated monthly payment is less than the interest that accrued that month, the federal government waives the remaining unpaid interest. This prevents negative amortization so the loan balance cannot grow.
The plan also provides for a government-matched principal reduction of up to $50 per month to make sure balances actively decline. But one missed payment can derail your progress. As Amanda Elliott, Associate Director of Financial Aid & Student Finance Advising at Colorado State University Global told the Post, “If a payment due date is missed, it can trigger a domino effect of issues: interest capitalization and negative amortization can cause debt to grow substantially, and defaulting can also severely damage a borrower’s credit score — an impact that may linger for years.”
What you need to know about enrolling in autopay
Enrolling in autopay for federal student loans is a straightforward process. To begin, you will have to log into your student loan account through your loan servicer’s official portal. Once logged in, navigate to the billing or payment settings section, where you will find the option to set up automatic debit. You’ll need to provide your bank routing number and account number to link your checking or savings account.
After submitting your banking details, you have to select a preferred monthly withdrawal date, though some servicers default to your existing payment deadline. It is crucial to review the terms and confirm the agreement to activate the system.
Most federal loan servicers reward this setup by automatically reducing your interest rate by 0.25 percentage points. This interest rate deduction applies immediately once the first automatic transfer is successfully processed.
You should continue making manual payments until you receive a formal confirmation email or notice stating that your autopay status is active, which will prevent accidental missed payments during the transition period.
Most importantly of all, always ensure your linked bank account holds sufficient funds each month to avoid overdraft penalties from your bank. Having autopay enabled without the funds to make the transaction is an exercise in futility.
If your loan are currently in default, don’t despair
If your loans are in default, you can still get the 1% reduction for autopay. First you have to sign into studentaid.gov using your FSA ID and consolidate your eligible loans. First, select the eligible federal loans you want to combine into a single loan. Next, choose a federal loan servicer to manage your new account and select a repayment plan, such as RAP.
Once you have reviewed the terms, signed the promissory note electronically, and submitted your application, your previous loans will be paid off, leaving you with one monthly payment and a fixed interest rate based on the weighted average of your old loans.
This article was written by Brooklyn-based financial journalist and Commerce Editor for the New York Post Will Kenton. Specializing in investing, personal finance and retirement planning, Will’s expertise is rooted in behavioral economics — a field he explored as associate editor of the New School Economics Review. Will aims to help readers navigate the “predictable irrationality” that influences financial decisions, providing practical real-world solutions to student loan debt, investments, mortgages and more. Before joining The Post in 2026, Will covered the intersection of money, economics and culture for Investopedia, AP News, Business Insider and TIME Stamped.
