Student Loan Interest Rates: Federal and Private Loan Costs, Comparisons and Repayment
Student loan interest rates determine how much borrowers pay for the money used to cover tuition, fees, housing, books and other eligible education expenses. In the United States, the rate depends on the loan program, borrower category, first disbursement date and, for private student loans, the lender’s assessment of credit risk and other application details.
For federal Direct Loans first disbursed from July 1, 2026, through June 30, 2027, the fixed rates are 6.52% for undergraduate Direct Subsidized and Unsubsidized Loans, 8.07% for graduate and professional Direct Unsubsidized Loans, and 9.07% for Direct PLUS Loans. These rates remain fixed for the life of each loan. Private student loan rates are set by individual lenders and may be fixed or variable.
This guide provides general educational information, not individualized financial, tax or legal advice. Confirm current loan terms with Federal Student Aid, your school and the lender or loan servicer.
What Are Student Loan Interest Rates?
A student loan interest rate is the percentage a lender charges for allowing a borrower to use borrowed money. It is applied to the outstanding principal balance, subject to the loan’s interest calculation method and contractual terms.
The principal is the amount borrowed before interest and fees. Interest is the borrowing cost that accumulates while the principal remains unpaid. A student who borrows $10,000 at a fixed annual rate of 6.52% does not pay a one-time 6.52% charge and then stop. Interest accrues over time, and the amount paid depends on the outstanding balance, the length of repayment, payment timing and whether unpaid interest is added to principal.
Student loan interest rates are not the same as the total cost of borrowing. A loan can carry a relatively low nominal rate but still cost more because of a long repayment period, origination fees, deferment, forbearance, capitalization or a variable rate that rises. Borrowers should compare the interest rate alongside fees, repayment rules, borrower protections and the total amount payable.
Interest Rate
The percentage used to calculate the cost of borrowing against the unpaid principal. Federal Direct Loan rates for new disbursements are fixed by loan category and academic-year window.
Principal Balance
The amount of borrowed money still outstanding. Payments generally cover accrued interest before reducing principal, so the balance may decline slowly at the beginning of repayment.
Total Repayment Cost
The principal, interest and applicable fees paid over the life of the loan. The repayment term and payment schedule can materially change this total.
Compare the annual percentage rate where available, total repayment, fixed or variable structure, fees, co-signer obligations, deferment rules and federal protections before choosing a loan.
Federal Student Loan Interest Rates for 2026–2027
The US Department of Education publishes the rates that apply to federal Direct Loans first disbursed during each annual period from July 1 through June 30. The rates below apply to loans first disbursed on or after July 1, 2026, and before July 1, 2027.
| Federal loan type | Borrower category | 2026–2027 fixed interest rate | Rate treatment |
|---|---|---|---|
| Direct Subsidized Loan | Undergraduate student who meets applicable financial-need requirements | 6.52% | Fixed for the life of the loan |
| Direct Unsubsidized Loan | Undergraduate student | 6.52% | Fixed for the life of the loan |
| Direct Unsubsidized Loan | Graduate or professional student | 8.07% | Fixed for the life of the loan |
| Direct PLUS Loan | Parent borrower or eligible graduate/professional borrower | 9.07% | Fixed for the life of the loan |
The undergraduate subsidized and unsubsidized rates are the same for this disbursement year, but the loans do not work the same way. For an eligible Direct Subsidized Loan, the federal government generally covers interest during qualifying periods of at least half-time enrollment, the grace period and eligible deferment. For a Direct Unsubsidized Loan, interest generally accrues from disbursement, including while the student is enrolled and during the grace period.
The graduate Direct Unsubsidized rate is higher than the undergraduate rate. Direct PLUS Loans have a separate rate and eligibility rules. A borrower should also check whether a PLUS Loan is available for the relevant program and enrollment date. Federal student loan rules changed for new borrowing beginning July 1, 2026, including changes to graduate PLUS availability and loan limits, with transition exceptions for certain continuing students.
Why do federal student loan rates differ by borrower type?
Federal rates are established under a statutory formula. For most new Direct Loans, the formula uses the high yield of the 10-year US Treasury note auction held before June 1, plus an additional percentage set by law for the loan category. The add-on differs for undergraduate loans, graduate/professional unsubsidized loans and PLUS loans. The resulting rate is subject to statutory caps.
For the 2026–2027 rate year, the 10-year Treasury note auction on May 12, 2026, produced a high yield of 4.468%. The statutory additions resulted in 6.52% for undergraduate Direct Loans, 8.07% for graduate/professional Direct Unsubsidized Loans and 9.07% for Direct PLUS Loans. The Department of Education announces the applicable rates; the formula is established by federal law.
Do existing federal student loans receive the new rate?
Generally, no. The annual rate applies to loans first disbursed during the specified July-to-June period. A Direct Loan first disbursed in 2024 or 2025 normally keeps the fixed rate assigned to that loan, even when the rate for new loans changes in a later year. A borrower with several loans may therefore have multiple interest rates and should review each loan separately in the Federal Student Aid account.
A student may receive loans with different rates across academic years. Use the loan details in StudentAid.gov or the servicer’s account to confirm the rate attached to each disbursement.
How Federal Student Loan Rates Have Changed
Federal Direct Loan interest rates can change for new loans each July. The rate attached to an existing fixed-rate loan does not change when a new academic-year rate is announced.
| First disbursement period | Undergraduate Direct Subsidized/Unsubsidized | Graduate Direct Unsubsidized | Direct PLUS |
|---|---|---|---|
| July 1, 2026 – June 30, 2027 | 6.52% | 8.07% | 9.07% |
| July 1, 2025 – June 30, 2026 | 6.39% | 7.94% | 8.94% |
| July 1, 2024 – June 30, 2025 | 6.53% | 8.08% | 9.08% |
| July 1, 2023 – June 30, 2024 | 5.50% | 7.05% | 8.05% |
| July 1, 2022 – June 30, 2023 | 4.99% | 6.54% | 7.54% |
| July 1, 2021 – June 30, 2022 | 3.73% | 5.28% | 6.28% |
| July 1, 2020 – June 30, 2021 | 2.75% | 4.30% | 5.30% |
The historical table illustrates why a borrower’s loan portfolio may contain several rates. For example, an undergraduate who borrowed in 2021–2022 and again in 2026–2027 may have one loan at 3.73% and another at 6.52%. The rate on the earlier loan does not automatically reset to the newer rate.
When reviewing older debt, distinguish the loan’s original rate from the weighted average rate that may apply after certain consolidation transactions. Consolidation can simplify repayment by combining eligible federal loans, but it may change the interest calculation, repayment term or benefits attached to the underlying loans. It should not be treated as a guaranteed way to reduce interest.
Private Student Loan Interest Rates: How Lenders Set Them
Private student loan interest rates are set by banks, credit unions, state-affiliated education finance organizations and specialist lenders. Unlike federal Direct Loan rates, private rates are not set by one national statutory formula.
A private lender assesses the application and determines the rate offered. Relevant factors may include the borrower’s credit score, credit history, income, existing debt, school, degree program, enrollment status, requested amount and repayment term. A co-signer with a stronger credit profile may improve the application, but the co-signer becomes legally responsible under the loan agreement if the student does not pay.
Private student loans may have fixed or variable interest rates. A fixed rate generally remains the same throughout the repayment period. A variable rate is linked to a benchmark index plus a lender margin and can rise or fall according to the contract. A low advertised variable rate may increase later, which can raise the monthly payment or total cost.
Why there is no single private student loan rate
Private lenders price risk differently. Two applicants borrowing the same amount for the same course may receive different offers because their credit histories, income, co-signers and lender criteria differ. The advertised range is not a promise that every applicant will qualify for the lowest rate. A rate quote should be evaluated against the exact repayment terms and fees offered to that borrower.
Fixed-Rate Private Loans
The interest rate does not change after the loan is made, subject to the contract. Fixed rates make it easier to forecast payments and total interest. They can be useful when payment certainty is more important than the possibility of a lower starting variable rate.
Variable-Rate Private Loans
The rate can change when the benchmark index changes or according to the contract’s reset schedule. Payments may rise or fall. Review the index, margin, adjustment frequency, rate caps, floor and maximum possible payment before accepting the offer.
Credit-Based Pricing
Private lenders often consider credit score, credit file, income and debt obligations. Applicants with limited credit history may receive a higher rate or may need a creditworthy co-signer.
Co-Signer Effect
A co-signer can strengthen an application and may help secure a lower rate. The co-signer shares legal responsibility for repayment, and missed payments can affect both parties’ credit records.
How to compare private student loan offers
- Request offers from more than one lender for the same loan amount and repayment term.
- Compare fixed and variable options separately rather than treating their starting rates as equivalent.
- Review the annual percentage rate (APR), origination charges and any other fees.
- Check whether the lender offers in-school deferment, interest-only payments or immediate repayment.
- Read the rules for hardship forbearance, death or disability discharge and co-signer release.
- Calculate the payment under a higher variable-rate scenario before choosing an adjustable loan.
Federal student loans generally provide standardized borrower protections and repayment pathways that private loans do not necessarily offer. A private loan with a lower advertised rate may still be less suitable if it has limited hardship options, requires a co-signer or exposes the borrower to variable-rate increases. Compare the complete contract rather than selecting a loan from the headline percentage alone.
Federal vs. Private Student Loan Interest Rates
Federal and private student loans both finance education, but they differ in rate-setting, eligibility, repayment options and borrower protections. Interest rate is important, but it is only one part of the decision.
| Feature | Federal student loans | Private student loans |
|---|---|---|
| Who sets the rate? | Federal law establishes the formula for most new Direct Loans. | Each lender sets its own pricing and underwriting criteria. |
| Rate type | New Direct Loans generally have fixed rates for the life of each loan. | May be fixed or variable, depending on the product. |
| Eligibility | Based on federal program rules, FAFSA information, enrollment and loan-specific requirements. | Based on lender criteria, creditworthiness, income and other underwriting factors. |
| Credit check | Most Direct Subsidized and Unsubsidized Loans do not require a credit check; PLUS Loans have credit requirements. | Credit history is commonly considered; a co-signer may be required. |
| Repayment options | Federal repayment plans and applicable statutory relief options may be available. | Options depend on the lender and the promissory note. |
| Interest support | Eligible Subsidized Loan interest is covered by the government during specified periods. | Interest generally accrues according to the contract; special benefits vary by lender. |
| Forgiveness or discharge | Specific federal programs may provide forgiveness or discharge if eligibility rules are met. | Generally no equivalent federal forgiveness programs; contract and law govern discharge. |
| Rate changes | Fixed rate does not change for that loan. | Variable rate may change; fixed rate ordinarily remains stable. |
Should students use federal loans before private loans?
For many students, reviewing and using eligible federal aid before private borrowing is a prudent starting point. Federal Direct Loans typically have fixed interest rates, do not require a co-signer for most student borrowers and offer repayment protections established by law. Subsidized loans can be particularly valuable for eligible undergraduates because the government pays interest during specified periods.
However, federal borrowing is subject to annual and aggregate limits, and graduate and professional students may face different limits and program rules. If federal aid does not cover the remaining cost of attendance, compare private offers only after considering scholarships, grants, work-study, payment plans and lower-cost education choices. Do not borrow more simply because a lender or program makes a larger amount available.
When might a private loan be considered?
A private loan may be considered when federal aid and other resources do not cover a necessary education expense, or when a borrower has compared the protections and costs and finds a specific private offer appropriate. A strong credit profile and a realistic plan to repay the debt can improve the terms available. Graduate borrowers should be especially careful when comparing private loans with federal options because loan eligibility and repayment rules changed for new borrowing beginning July 1, 2026.
A lower private rate may not compensate for losing access to federal repayment options or protections. Review the expected career income, debt amount, repayment horizon and risk of income disruption.
How Student Loan Interest Is Calculated
Federal Direct Loans use a daily interest calculation. Interest accrues on the unpaid principal balance each day, so the amount changes as the borrower makes payments or the balance otherwise changes.
The daily interest formula
Daily interest = outstanding principal × (annual interest rate ÷ 365.25)
Interest over a period = daily interest × number of days in that period
The federal student aid explanation uses 365.25 days to calculate the daily interest factor, accounting for leap years. Loan contracts and servicer calculations govern the actual account.
Consider a simplified example. A borrower has a $10,000 Direct Unsubsidized Loan at 6.52%. The daily interest factor is approximately 0.0652 divided by 365.25. On a constant $10,000 principal balance, that is approximately $1.78 in interest per day. Over 30 days, the interest would be approximately $53.55, assuming no payment, balance change or other adjustment.
This example is illustrative, not a monthly bill quote. Actual accrued interest depends on the exact number of days, principal balance, disbursement date, payments, applicable fees and servicer processing. A borrower’s balance may include several loan groups with different rates and disbursement dates.
Simple interest and capitalization
Daily interest accrual is not the same as automatically compounding interest every day. Interest accumulates against the outstanding principal. In specified circumstances, unpaid interest may capitalize, meaning it is added to principal. Once that occurs, future interest accrues against the larger principal balance.
For example, if $500 of unpaid interest is capitalized on a $10,000 loan, the principal becomes $10,500. Future interest is then calculated against $10,500 rather than $10,000. Capitalization can therefore increase the cost of repayment even though the nominal interest rate has not changed.
When does interest accrue?
- Direct Subsidized Loans: The government generally pays interest during qualifying in-school, grace and deferment periods.
- Direct Unsubsidized Loans: Interest generally begins accruing when funds are disbursed, including during school and the grace period.
- PLUS Loans: Interest generally accrues from disbursement, subject to applicable repayment and deferment rules.
- Private student loans: Interest accrual and payment requirements depend on the lender’s contract. Interest may accrue while the student is enrolled.
- Forbearance: Interest generally continues to accrue on federal loans during forbearance.
Making interest payments while enrolled can prevent some unpaid interest from accumulating on an unsubsidized or private loan. Even small voluntary payments can reduce the amount that may otherwise be added to the balance later. Borrowers should first maintain essential living costs and meet any required payments.
How Interest Rates Affect Student Loan Repayment
The interest rate affects the amount of interest that accrues, the monthly payment required under a fixed repayment schedule and the total cost paid over time. A higher rate generally increases borrowing costs when the principal and repayment term are otherwise the same.
Two students can borrow the same amount and pay different totals because their interest rates, repayment plans and payment timing differ. A longer repayment term can reduce the required monthly payment but usually increases total interest because the balance remains outstanding for longer. A shorter term generally increases the monthly payment but reduces the time over which interest accrues.
Illustrative repayment comparison
The table below shows an approximate fixed-payment illustration for a $20,000 loan repaid over 10 years. It uses standard amortization assumptions and excludes origination fees, deferment, capitalization, missed payments and other adjustments. It is not a quote from a lender or a representation of any particular federal repayment plan.
| Annual interest rate | Approximate monthly payment | Approximate total paid over 10 years | Approximate interest paid |
|---|---|---|---|
| 4.00% | $202.49 | $24,299 | $4,299 |
| 6.52% | $227.50 | $27,300 | $7,300 |
| 8.07% | $243.60 | $29,232 | $9,232 |
| 9.07% | $254.50 | $30,540 | $10,540 |
The comparison demonstrates the relationship between interest rate and repayment cost. At the same principal and term, a loan at 9.07% costs more than one at 4.00%. However, a real student loan portfolio may contain multiple loans, rates and repayment schedules. Use the servicer’s repayment calculator or account statement for a personalized estimate.
Why the repayment term matters
Suppose a borrower owes $30,000. A 10-year schedule generally requires larger monthly payments than a 20-year schedule, but the borrower pays interest for fewer years. Extending repayment may help with monthly cash flow, but it can increase total interest. Income-driven plans may calculate payments differently, and the amount paid may not follow a standard amortization schedule.
How payment allocation works
For federal student loans, payments generally cover outstanding interest before reducing principal. If a borrower has multiple loan groups, the servicer applies payments according to applicable rules and instructions. Extra payments can reduce principal faster after accrued interest is covered. Borrowers should check their servicer’s payment-allocation rules and specify how additional amounts should be applied when appropriate.
A payment that fits the current budget may still result in a high lifetime cost. Compare the full schedule and consider how income, family responsibilities and employment stability could change.
Student Loan Fees, APR and the Total Cost of Borrowing
Interest is not the only cost attached to a student loan. Origination fees and other charges can affect the amount received, the balance owed and the total cost of financing.
Federal student loan origination fees
Federal Direct Subsidized, Direct Unsubsidized and Direct PLUS Loans may carry an origination fee. The fee is deducted proportionately from each disbursement, while the borrower remains responsible for repaying the full loan principal. The fee percentage can change according to the applicable federal schedule and disbursement date. Check the current Federal Student Aid fee information before signing a Master Promissory Note.
Because the fee is withheld before the funds reach the school, the net amount credited can be lower than the loan amount shown in the award. If a student needs a specific amount to cover tuition or other costs, the school financial aid office can explain how the fee affects the disbursement.
What is APR?
The annual percentage rate is designed to express borrowing cost in a standardized annual measure that can include interest and certain fees. APR can help compare private loan offers, but borrowers should still review the payment schedule and contract. APR calculations may not capture every possible future cost, particularly when the loan has a variable interest rate or optional fees.
Costs to check before accepting a loan
- Origination or disbursement fees deducted from the loan proceeds.
- Late-payment charges and returned-payment fees, where permitted.
- Variable-rate index, margin, adjustment frequency, floor and cap.
- Whether interest accrues during school, grace periods and deferment.
- Whether unpaid interest can capitalize and when capitalization occurs.
- Prepayment rules and whether additional payments are applied to principal.
- Co-signer release requirements and any associated application process.
How to Get a Lower Student Loan Interest Rate
Borrowers have limited control over the statutory rate on a new federal Direct Loan, but they can make choices that reduce the amount borrowed, limit interest accumulation or improve the terms of a private loan.
Apply for scholarships and grants first
Scholarships and grants can reduce the amount that must be financed through loans. Review institutional awards, state grants, federal grants and credible private scholarships. Confirm renewal conditions, academic requirements and whether the award affects other financial aid.
Complete the FAFSA and review federal aid
The Free Application for Federal Student Aid (FAFSA) is used to determine eligibility for federal student aid and may also be used by states and colleges. Review the school’s financial aid offer and understand which amounts are grants, work-study and loans. A loan offer is not a grant and must be repaid with interest.
Borrow only what the education budget requires
Calculate tuition, mandatory fees, housing, food, books, transportation and other eligible expenses. Subtract grants, scholarships, savings, family contributions and realistic earnings. Decline unnecessary loan amounts where the school permits it. Every borrowed dollar can accrue interest.
Compare private lenders carefully
If a private loan is necessary, request multiple quotes using the same amount and repayment term. Compare fixed and variable rates, APR, fees, co-signer requirements, deferment and hardship options. Do not choose a lender solely because an advertisement displays a low starting rate.
Consider a creditworthy co-signer only after reviewing the risk
A co-signer may help a student qualify or receive a more competitive private rate. The co-signer is not simply a reference: the co-signer may be required to repay the debt if the student does not. Review co-signer release terms and the consequences of missed payments.
Pay accruing interest when financially practical
Making voluntary interest payments while enrolled can prevent some interest from accumulating on unsubsidized or private loans. This may reduce the balance at repayment. Do not sacrifice essential expenses or miss higher-priority obligations to make optional payments.
Make extra principal payments when appropriate
Once accrued interest is covered, additional payments may reduce principal and lower future interest. Confirm that the servicer applies extra payments as intended and does not simply advance the next due date without reducing the targeted balance.
Avoid unnecessary deferment and forbearance
These options can provide relief when payments are unaffordable, but interest may continue to accrue. Understand the effect on the balance and future payments before entering a pause. Contact the servicer early if a payment problem is developing.
Refinancing federal loans with a private lender can remove access to federal benefits and protections. Compare the interest savings against the value of income-driven repayment, deferment, forbearance, forgiveness and discharge options that may be lost.
Student Loan Refinancing and Interest Rates
Student loan refinancing replaces one or more existing loans with a new loan from a private lender. The new loan may have a different interest rate, repayment term and monthly payment.
A borrower with strong credit and stable income may qualify for a lower private refinancing rate than the rate on an existing private student loan. Refinancing may also allow a borrower to combine several private loans into one payment. The result depends on the new rate, fees, term and contract provisions.
When refinancing may be worth comparing
- The borrower has improved credit or income since the original loan application.
- The new fixed rate is meaningfully lower than the existing private loan rate.
- The new repayment term does not increase total interest beyond the borrower’s objectives.
- The lender offers clear hardship, deferment and co-signer policies.
- The borrower understands whether a variable rate could rise and how high it may go.
Federal loan refinancing risk
When a federal student loan is refinanced into a private loan, it is no longer a federal Direct Loan. The borrower generally gives up federal repayment plans and statutory benefits attached to the original federal debt. That can include access to federal income-driven repayment options and qualifying federal forgiveness or discharge programs. A private lender’s hardship policy is not the same as a federal entitlement.
Federal Direct Consolidation is different from private refinancing. Consolidation combines eligible federal loans into a Direct Consolidation Loan under federal rules. It does not convert the debt into a private loan, but the interest calculation and repayment consequences should be reviewed. Consolidation is not the same as obtaining a lower market rate.
What Changed for Federal Student Loans in 2026?
Federal student loan rules changed for new borrowing beginning July 1, 2026. These changes affect more than interest rates: loan limits, graduate PLUS availability and repayment options may depend on when a borrower enrolled and when the loan was first disbursed.
The 2026–2027 interest rates are only one part of the borrowing decision. The Working Families Tax Cuts Act, also referred to in earlier federal materials as the One Big Beautiful Bill Act, introduced changes to federal student loan limits and repayment structures. The Department of Education published final regulations to implement relevant statutory changes.
Graduate PLUS changes
Graduate PLUS eligibility is being phased out for new graduate and professional student borrowing, subject to transition provisions. Certain students who were enrolled in a program and had received a loan for that program by June 30, 2026, may qualify for a limited exception during their expected time to credential. Students should not assume that all graduate students retain the same borrowing access after July 1, 2026.
New borrowing limits
New annual and aggregate limits apply to specified graduate, professional and parent borrowing categories for loans made on or after July 1, 2026, subject to statutory exceptions and transition rules. The limits differ by borrower category. Students should confirm their own eligibility and remaining borrowing capacity with their school’s financial aid office and current Federal Student Aid guidance before relying on a maximum figure.
Repayment plan transition
Federal repayment options also changed. For loans disbursed on or after July 1, 2026, the Tiered Standard Plan is identified as the fixed-payment option if the borrower does not select another available plan. Income-driven options and transition rules depend on the loan type and disbursement date. Borrowers with older loans may have different plan eligibility than borrowers taking out new loans.
These policy changes make the first disbursement date and enrollment history important. A student comparing loan offers should ask the financial aid office which federal program rules apply to their specific program and whether a transition exception is available.
Do not assume that a graduate PLUS loan, annual limit or repayment option available to an earlier cohort remains available to a new borrower. Use current Federal Student Aid information and obtain written clarification from the school.
How Repayment Plans Interact With Student Loan Interest
A repayment plan determines how payments are scheduled and how quickly principal is reduced. It does not normally change the fixed interest rate assigned to a federal Direct Loan.
Under a standard amortizing repayment schedule, each payment covers interest accrued since the previous payment and then reduces principal. Early payments often contain a larger interest portion because the outstanding principal is higher. As principal falls, less interest accrues and more of each payment can reduce the balance.
Income-driven repayment plans calculate required payments using program rules and borrower information such as income and family size. A payment may be lower than the interest accruing during a period. If the payment does not cover all accrued interest, unpaid interest may accumulate under the applicable rules. Borrowers should review the current plan terms, interest treatment and forgiveness conditions rather than assuming that a lower payment means a lower total cost.
Standard and tiered standard repayment
Fixed-payment plans are designed to repay the loan over a defined period. The monthly amount depends on the balance, interest rate and repayment term. The plan can provide a predictable schedule, but the required payment may be higher than under an income-driven option.
Income-driven repayment
Income-driven plans can reduce required payments for borrowers who meet the eligibility rules. The amount paid may change as income and family circumstances change. Because payments may not cover all accrued interest, borrowers should review the treatment of unpaid interest and any applicable forgiveness rules.
Deferment and forbearance
Deferment and forbearance can temporarily postpone or reduce required payments under qualifying conditions. Interest treatment depends on the loan type and the relief category. Interest generally continues to accrue on unsubsidized loans and during forbearance. A pause can therefore increase the balance or total cost if unpaid interest is not paid before it capitalizes or is otherwise due.
How to Choose a Student Loan Based on Its Interest Rate
A sound student loan decision connects the amount borrowed, the rate, the degree program, likely earnings, repayment protections and the borrower’s ability to manage financial risk.
Undergraduate borrowers
Check eligibility for Direct Subsidized Loans first because qualifying interest is covered during specified periods. Compare the federal Direct Unsubsidized rate and loan limit with the actual remaining education cost. Avoid private borrowing until grants, scholarships and federal aid have been reviewed.
Graduate and professional students
Review the current Direct Unsubsidized rate, applicable annual and aggregate limits, and the post-July 2026 graduate PLUS changes. Compare any private offer against federal repayment protections and the realistic income outlook for the intended profession.
Parents financing education
Compare Parent PLUS eligibility, interest rate, fees and repayment responsibility with private parent loans and other household financing. A parent borrower is legally responsible for a Parent PLUS loan, not the dependent student.
Borrowers with existing loans
List every loan’s servicer, type, balance, rate, fixed or variable status, repayment plan and accrued interest. Consider extra payments or refinancing only after evaluating federal protections and the total cost of the new contract.
A practical student loan comparison checklist
- What is the exact loan type and who is legally responsible for repayment?
- What is the interest rate and when does it begin accruing?
- Is the rate fixed for the full term or variable?
- What fees are deducted or charged?
- What is the expected monthly payment and total repayment amount?
- Can the borrower make interest payments while in school?
- What happens during deferment, forbearance or financial hardship?
- Does the loan provide forgiveness, discharge or co-signer release rights?
- Will the debt remain affordable under a lower-than-expected starting salary?
Estimate the total debt at graduation and compare it with realistic early-career earnings, living costs and other financial obligations. A degree’s value and a loan’s affordability are related but separate questions.
Common Mistakes When Comparing Student Loan Interest Rates
A rate comparison can be misleading when borrowers overlook fees, variable-rate risk, loan eligibility and the cost of repayment over time.
Choosing the lowest advertised rate
Advertised rates may represent the lowest rate available to applicants with excellent credit and a particular repayment term. The rate offered to an individual borrower can be higher. Compare personalized written offers, not just marketing ranges.
Ignoring fixed versus variable rates
A variable loan may begin with a lower rate but become more expensive after a benchmark increase. Borrowers should understand the index, margin, reset period and maximum rate. If a payment increase would strain the budget, a fixed rate may offer greater certainty.
Forgetting that interest accrues during school
Unsubsidized and many private loans accrue interest while a student is enrolled. Deferring payments does not necessarily stop interest. Estimate the balance at graduation, not only the amount originally borrowed.
Borrowing more than the net education cost
Taking the full loan amount offered can increase future payments. Calculate the funding gap after grants, scholarships, savings and realistic income. Decline unneeded loan funds where permitted.
Refinancing federal debt without considering lost protections
A lower private rate may look attractive, but refinancing federal loans into private debt generally ends access to federal repayment programs and statutory protections. Compare the value of those benefits before signing.
Assuming all federal loans have the same rate
Rates vary by loan type and first disbursement year. A borrower’s portfolio can include several rates. Review each loan group separately before estimating total interest or deciding which balance to pay down first.
Where to Check Student Loan Rates and Terms
Use government and lender documents to verify current rates, fees, eligibility and repayment rules. Rate tables and program conditions can change, so check the relevant source before borrowing or refinancing.
Federal Student Aid
The US Department of Education’s Federal Student Aid website publishes federal loan interest rates, loan information, repayment details and borrower account tools.
Federal Student Aid Knowledge Center
The Knowledge Center publishes official announcements for schools and financial aid professionals, including the 2026–2027 Direct Loan rate announcement.
Consumer Financial Protection Bureau
The CFPB explains the differences between federal and private student loans, rate types, co-signers and borrower considerations.
School Financial Aid Office
The school’s financial aid office can explain the aid offer, cost of attendance, loan eligibility, disbursement timing and school-specific procedures.
Frequently Asked Questions About Student Loan Interest Rates
These answers address common questions about federal and private student loan rates, interest accrual, repayment and borrowing decisions in the United States.
What are the current federal student loan interest rates for 2026–2027?
For Direct Loans first disbursed from July 1, 2026, through June 30, 2027, the fixed rate is 6.52% for undergraduate Direct Subsidized and Unsubsidized Loans, 8.07% for graduate and professional Direct Unsubsidized Loans, and 9.07% for Direct PLUS Loans. The rate remains fixed for the life of each loan.
Are federal student loan interest rates fixed?
Most federal Direct Loans first disbursed on or after July 1, 2006 have fixed rates. For new Direct Loans, the applicable rate depends on the loan type and first disbursement period. A fixed rate does not change over the life of that loan.
Do student loan interest rates change every year?
Federal rates for new Direct Loans are determined annually for the July 1 through June 30 period. However, an existing fixed-rate loan normally keeps the rate assigned when it was first disbursed. Private variable-rate loans may change according to the lender’s contract.
What is the difference between subsidized and unsubsidized student loans?
For eligible Direct Subsidized Loans, the federal government generally pays interest during qualifying in-school, grace and deferment periods. Direct Unsubsidized Loans accrue interest from disbursement, including while the student is in school and during the grace period.
Are private student loan rates lower than federal rates?
Not necessarily. Private rates depend on creditworthiness, income, the school, loan term, co-signer and lender pricing. Some borrowers may receive a private offer below a federal PLUS rate, but private loans may not provide the same federal repayment protections. Compare the complete loan terms.
Can private student loan interest rates increase?
Yes. A private loan with a variable rate can change according to its benchmark index, margin and adjustment schedule. A fixed-rate private loan generally remains at the same rate throughout the loan term, subject to the contract.
How is daily student loan interest calculated?
Federal Direct Loan daily interest is calculated by multiplying the outstanding principal by the interest rate factor, then multiplying by the number of days. The rate factor is the annual interest rate divided by 365.25.
Does interest accrue while I am in college?
Interest generally accrues while a borrower is in school on Direct Unsubsidized and PLUS Loans, as well as on many private loans. Eligible Direct Subsidized Loan interest is covered by the federal government during qualifying periods.
Can I pay student loan interest while I am still in school?
Borrowers can generally make voluntary payments toward accrued interest while enrolled, subject to their loan terms. Paying interest as it accrues may reduce the amount that remains unpaid when repayment begins.
Does a higher interest rate increase monthly payments?
For the same principal and repayment term under a standard fixed-payment schedule, a higher interest rate generally increases the monthly payment and total amount repaid. Income-driven plans may calculate required payments differently.
Can I negotiate my federal student loan interest rate?
No. Federal Direct Loan rates are determined under federal law and are not individually negotiated with the Department of Education or loan servicer. Private lenders may offer different rates based on underwriting and product terms.
Does refinancing lower student loan interest rates?
Refinancing may reduce the rate for a borrower who qualifies for better private loan terms, but savings are not guaranteed. Refinancing federal loans into private debt generally removes access to federal repayment options and protections. Compare total cost and lost benefits.
Does student loan consolidation lower the interest rate?
Federal Direct Consolidation is not designed to give borrowers a lower market interest rate. The new rate is generally based on the weighted average of the loans being consolidated, rounded up according to federal rules. Review repayment and benefit consequences before consolidating.
What happens if unpaid student loan interest capitalizes?
Capitalization adds unpaid interest to the principal balance. Future interest is then calculated on the higher balance, which can increase total repayment cost. Capitalization occurs only in specified circumstances under the loan’s governing rules.
Do student loan rates depend on credit score?
Private student loan rates commonly depend on credit history and other underwriting factors. Most Direct Subsidized and Unsubsidized federal student loans do not use a borrower’s credit score to set the interest rate. PLUS Loans have separate credit requirements.
Can a co-signer help me get a lower private student loan rate?
A creditworthy co-signer may improve the application and could help the student qualify for a lower rate. The co-signer is legally responsible for repayment under the contract if the borrower fails to pay. Check whether co-signer release is available and what conditions apply.
What is the best student loan interest rate?
There is no single best rate for every borrower. The appropriate loan depends on the rate, fees, fixed or variable structure, total repayment, eligibility, repayment protections and the borrower’s financial circumstances. Compare personalized offers and federal options before borrowing.
Where can I check the interest rate on my existing federal student loan?
Sign in to StudentAid.gov and review the loan details, including loan type, servicer, balance and interest rate. You can also contact the loan servicer listed on the account for confirmation.
Compare Student Loan Interest Rates Before You Borrow
Student loan interest rates influence monthly payments, accrued interest and the total cost of education debt. For the 2026–2027 year, federal Direct Loan rates range from 6.52% for undergraduate Direct Loans to 9.07% for Direct PLUS Loans. Private student loan rates vary by lender and borrower profile, and may be fixed or variable. Compare rates alongside fees, repayment terms, eligibility, interest capitalization and borrower protections. Confirm current details with Federal Student Aid, your school and the lender before accepting a loan.
Rates, fees, loan limits and repayment rules may change. This guide reflects the 2026–2027 federal Direct Loan rates announced by Federal Student Aid and should be checked against current official guidance before publication and periodically thereafter.
