The U.S. Department of Education has extended the deadline for federal student loan borrowers to enroll in autopay and receive an increased interest rate discount, officials announced Tuesday. Borrowers now have until December 31, 2026, to sign up for automatic payments, extending the previous cutoff of September 30.

Since June, the department has offered a one-percentage-point reduction in the interest rate for borrowers who opt into autopay, a significant increase from the standard 0.25 percentage point discount. This enhanced incentive aims to encourage timely repayment and help borrowers save money, potentially reducing loan costs by hundreds or thousands of dollars over time.

The discount applies to loans taken out in or after July 2012 and will remain available through June 30, 2028. Borrowers who are currently in default must consolidate their loans and initiate a new repayment plan before they can qualify for the autopay discount.

Nearly two million borrowers have enrolled in autopay since the higher discount was introduced earlier this summer, according to the Education Department. The extension comes amid ongoing challenges with elevated rates of loan delinquency and default. Department data indicate that over 9.3 million federal student loan borrowers have missed payments for at least 360 days, while an additional 3.5 million are at least 30 days behind on payments.

By expanding the enrollment period, the Education Department aims to increase the number of borrowers participating in autopay, thereby improving repayment rates and reducing defaults across the federal student loan portfolio.