Washington DC - President Donald Trump's Department of Education (DOE) has moved to reduce student loan interest rates for a brief period of time.
In a press release shared on Thursday, the department announced that federal student loan borrowers enrolled in auto pay will be eligible for a 1% interest rate reduction beginning July 1.
The benefit will be granted to those who sign up for auto pay by September 30, 2026, or anyone already signed up, and will run until June 30, 2028.
"This new initiative further complements the Trump Administration's efforts to make higher education more affordable and simplify student loan repayment," the release stated.
Earlier this month, the DOE also announced that on July 1 – the same day the reduced interest rates begin – the department will also be rolling out two new payment plans for borrowers: the Repayment Assistance Plan (RAP) and the Tiered Standard Plan (TSP).
For RAP, monthly rates will be determined based on their income and number of dependents, while TSP will offer 10 to 25-year terms based on the borrower's total outstanding loan balance.
The moves come as President Trump and DOE Secretary Linda McMahon have expressed determination to shut down the department entirely, as they believe education oversight should be left to individual states.
While they have yet to push legislation to dismantle the department, which would require Congressional approval, they have massively cut funding and shifted key offices to other departments.