If you're among the hundreds of thousands of student loan borrowers out there, long-awaited relief could be on the way.
In July, defaults on student loans surged, reaching record levels as borrowers struggle to keep up with payments.
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An appeals court has since ruled that the Education Department has to forgive more than 170,000 borrowers who say they were misled by for-profit schools.
The decision clears about $23 billion in debt relief.
It also expands a landmark settlement that was first filed in 2019, roughly 450,000 borrowers are now eligible for loan forgiveness.
Federal student loan borrowers enrolled in automatic payments will be eligible for a 1% interest rate reduction beginning July 1, the Department of Education said.
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Borrowers who are already enrolled in auto pay, or who sign up by Sept. 30, 2026, will receive the temporary rate reduction through June 30, 2028.
"No matter your age or college credential, we want to make sure that borrowers can understand their options and choose a repayment option that works best for them. This interest rate reduction will help borrowers as they consider new, affordable repayment plans and work to repay their loans on time," Under Secretary of Education Nicholas Kent said in a statement.
Borrowers enrolled in auto pay currently receive a 0.25% interest rate reduction.
