Student loan interest rates can add thousands of dollars to the cost of college. The rate you receive affects your monthly payments and how much you’ll repay over the life of your loan.
Federal student loan interest rates are set each academic year, while private student loan rates depend on the lender and your financial situation. The difference matters, especially if you’re comparing federal loans with private financing.
Here’s a look at current federal student loan interest rates, recent private loan averages, and how interest affects repayment. We’ve used official federal rate data and published lender marketplace figures to make the comparisons.
Current Federal Student Loan Interest Rates for 2026–27
Federal student loan interest rates range from 6.52% to 9.07% for the 2026–27 academic year. Your rate depends on the type of federal student loan you receive and whether you’re an undergraduate, graduate, or parent borrower.
The following rates apply to loans with a first disbursement between July 1, 2026, and June 30, 2027.
| Federal Student Loan Type | 2026–27 Rate | 2025–26 Rate |
|---|---|---|
| Undergraduate Direct Subsidized and Unsubsidized Loans | 6.52% | 6.39% |
| Graduate Direct Unsubsidized Loans | 8.07% | 7.94% |
| Parent PLUS Loans | 9.07% | 8.94% |
| Grad PLUS Loans (eligible existing borrowers only) | 9.07% | 8.94% |
Source: Federal Student Aid.
All federal Direct Loans have fixed interest rates. Once you receive a loan, its interest rate stays the same throughout repayment. If you borrowed in an earlier academic year, your federal student loan interest rate may be different.
Federal student loans also have origination fees. For the 2026–27 academic year, the fee is 1.057% for Direct Subsidized and Unsubsidized Loans and 4.228% for PLUS loans. The fee comes out of your loan disbursement, but you still owe the full amount borrowed.
New Federal Student Loan Borrowing Limits for 2026
Federal student loan rules changed on July 1, 2026. The changes affect how much certain graduate students, professional students, and parents can borrow.
For borrowers subject to the new limits, the maximum amounts are:
| Borrower Type | Annual Limit | Aggregate Limit |
|---|---|---|
| Graduate Students | $20,500 | $100,000 |
| Professional Students | $50,000 | $200,000 |
| Parent PLUS Borrowers | $20,000 per dependent student | $65,000 per dependent student |
The graduate and professional student limits apply to borrowing for those levels of education and may depend on prior graduate or professional borrowing. A separate $257,500 lifetime federal student loan limit also applies to many borrowers.
Grad PLUS loans are no longer offered to new graduate and professional borrowers. However, students who enrolled in their programs by June 30, 2026, and borrowed a qualifying Direct Loan for the same program before July 1, 2026, may qualify for a temporary exception.
Eligible students must remain enrolled in the same program at the same school. The exception lasts for the shorter of three academic years or the remaining expected program length.
Some existing Parent PLUS borrowers also qualify for exceptions to the new borrowing limits.
These changes matter because students who reach their federal borrowing limits may need private loans to cover additional education costs. Our guide to federal student loans explains the different loan programs and eligibility requirements.
Average Private Student Loan Interest Rates in 2026
Private student loan interest rates depend on your credit score, income, debt obligations, loan term, and whether you apply with a cosigner. Unlike federal student loans, private lenders don’t charge every borrower the same interest rate.
Recent data from Credible provides a useful comparison of average private student loan interest rates by credit score range.
The figures below reflect borrowers who prequalified through Credible from October 2025 through September 2026 and selected lenders with five-year variable or ten-year fixed loan terms.
| Credit Score Range | 5-Year Variable Rate | 10-Year Fixed Rate |
|---|---|---|
| 780 or higher | 7.08% | 6.80% |
| 720–779 | 9.07% | 7.73% |
| 680–719 | 10.52% | 9.40% |
| 640–679 | 10.75% | 11.15% |
| 600–639 | 12.16% | 12.19% |
Source: Credible private student loan rate data.
These are averages from borrowers in Credible’s marketplace, not national averages or guaranteed offers. Your actual interest rate may differ based on your qualifications and the lender you choose.
As of October 2026, lenders on Credible’s marketplace also advertised fixed APRs from 1.99% to 17.99% and variable APRs from 3.50% to 17.99%.
Those ranges represent advertised offers rather than average interest rates. The lowest APRs generally require excellent credit and may depend on discounts or other lender requirements.
Private student loan interest rates can change throughout the year, so it’s worth comparing current offers before you apply. Our guide to the best private student loans compares lenders, rates, fees, and repayment options.
Federal vs. Private Student Loan Interest Rates
Federal student loans generally offer more predictable borrowing terms, while private loans may provide lower interest rates to borrowers with excellent credit. However, the lowest advertised rate isn’t necessarily the best option for every borrower.
Here’s how federal and private student loans compare.
| Feature | Federal Student Loans | Private Student Loans |
|---|---|---|
| Interest Rates | Fixed by federal law | Fixed or variable, based on lender and borrower |
| Credit Requirements | No credit check for Direct Subsidized or Unsubsidized Loans; PLUS loans require a credit check | Credit-based approval, often with a cosigner |
| Origination Fees | 1.057% for Direct Subsidized and Unsubsidized Loans; 4.228% for PLUS loans | Varies by lender; many charge none |
| Repayment Options | Federal repayment plans and borrower protections | Lender-specific repayment and hardship options |
| Loan Forgiveness | Certain federal loans may qualify | Generally not offered |
| Borrowing Limits | Federal annual and aggregate limits | Often up to the school’s certified cost of attendance, minus other aid |
Federal student loans have protections that private lenders generally don’t offer. These include certain income-based repayment options, deferment programs, and potential loan forgiveness.
It’s also important to compare the right numbers. Federal student loan interest rates don’t include origination fees, while private loan APRs generally reflect applicable finance charges. A comparison based solely on the stated interest rate may overlook part of the borrowing cost.
For most undergraduate borrowers, federal student loans are worth considering before private financing, even when a private lender advertises a lower APR.
How Student Loan Interest Rates Are Determined
Federal and private student loan interest rates follow different pricing methods. Federal rates change annually under a formula established by Congress, while private lenders adjust their offers based on market conditions and borrower qualifications.
How Federal Student Loan Interest Rates Are Set
Federal Direct Loan interest rates are tied to the 10-year Treasury note.
Each year, the government uses the high yield from the final 10-year Treasury note auction before June 1. It adds a percentage established by law for each federal loan category.
For the 2026–27 academic year, the Treasury auction yield was 4.468%. The government added:
- Undergraduate Direct Loans: 2.05 percentage points, for a final rate of 6.52%.
- Graduate Direct Unsubsidized Loans: 3.60 percentage points, for a final rate of 8.07%.
- Direct PLUS Loans: 4.60 percentage points, for a final rate of 9.07%.
Federal law also places limits on how high these rates can go. The maximum is 8.25% for undergraduate Direct Loans, 9.50% for graduate Direct Unsubsidized Loans, and 10.50% for PLUS loans.
Once the annual rates are established, they apply to eligible new loans during the next July 1 through June 30 period.
How Private Student Loan Interest Rates Are Set
Private lenders evaluate the financial risk associated with each loan application. Your credit score and income are major factors, but lenders also consider existing debts, loan terms, and cosigner qualifications.
Variable-rate private student loans generally use a market benchmark, such as the Secured Overnight Financing Rate (SOFR) or prime rate, plus a lender’s margin. When the benchmark changes, your interest rate may change according to the loan agreement.
Fixed-rate private student loans maintain the same interest rate throughout repayment. Lenders establish those rates based on market conditions and the borrower’s qualifications at the time of approval.
How Student Loan Interest Rates Have Changed Over Time
Federal student loan interest rates have changed considerably since 2020. Undergraduate rates reached a low of 2.75% during the 2020–21 academic year before increasing as Treasury yields rose.
The following table shows undergraduate federal Direct Loan interest rates over the past seven academic years.
| Academic Year | Undergraduate Federal Loan Rate |
|---|---|
| 2020–21 | 2.75% |
| 2021–22 | 3.73% |
| 2022–23 | 4.99% |
| 2023–24 | 5.50% |
| 2024–25 | 6.53% |
| 2025–26 | 6.39% |
| 2026–27 | 6.52% |
Rates more than doubled between 2020–21 and 2024–25. They then declined slightly for 2025–26 before increasing again for 2026–27.
These changes affect new federal student loans. Borrowers with existing fixed-rate federal loans keep their original interest rates.
Private student loan interest rates also respond to market conditions, but they don’t follow the same annual schedule. Lenders can change their advertised rates at different times, and individual borrowers may receive different offers based on their finances.
How Student Loan Interest Rates Affect Monthly Payments
Higher interest rates increase your monthly payments and the total interest you’ll pay over the life of a student loan.
Consider a $10,000 loan with a ten-year repayment term. Here’s how three different fixed interest rates affect repayment costs.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 6.52% | $113.65 | $3,637.97 |
| 8.07% | $121.70 | $4,603.73 |
| 9.07% | $127.05 | $5,246.59 |
These estimates assume 120 equal monthly payments, no loan fees, and no unpaid interest before repayment begins. Actual payments may differ slightly due to lender calculations and rounding.
At 9.07%, you’ll pay approximately $1,609 more in interest than you would at 6.52% over ten years. If you borrow $30,000 instead of $10,000 under the same conditions, the difference grows to approximately $4,826.
Your repayment term matters, too. A longer term generally reduces your monthly payment but increases the total amount of interest you pay.
How to Calculate Daily Student Loan Interest
Federal Direct Loans generally use simple daily interest. The amount of interest that accumulates depends on your outstanding principal, annual interest rate, and the number of days since your last payment.
The formula is:
Interest = Outstanding Principal × (Annual Interest Rate ÷ 365.25) × Number of Days
For example, consider a $10,000 federal student loan with a 6.52% interest rate.
Your daily interest charge is approximately $1.79. Over 30 days, the loan accumulates about $53.55 in interest if the principal balance doesn’t change.
As you make payments and reduce the principal, your daily interest charges decrease. However, unpaid interest from school or certain deferment periods may increase your eventual repayment costs.
Fixed vs. Variable Student Loan Interest Rates
A fixed interest rate stays the same throughout the life of a loan. A variable interest rate can increase or decrease based on market conditions.
Federal Direct Loans have fixed rates, while private student loan lenders commonly offer both options.
Fixed Student Loan Interest Rates
Fixed-rate loans offer predictable interest costs. Your interest rate won’t change, so it’s easier to estimate payments and budget for repayment.
This can be especially helpful if you expect to repay a student loan over ten years or longer. Even if market interest rates rise, your loan’s fixed rate remains unchanged.
Variable Student Loan Interest Rates
Variable-rate loans may offer lower initial interest rates than comparable fixed-rate loans. However, the interest rate can change monthly, quarterly, or at another interval established by the lender.
If market rates increase, your payment may rise. If rates decline, you could pay less interest.
Variable rates may appeal to borrowers who plan to repay their loans quickly and can handle potential payment increases. Before choosing one, check the rate adjustment schedule, maximum interest rate, and how a higher payment would affect your budget.
How Interest Works on Subsidized and Unsubsidized Student Loans
Federal Direct Subsidized and Unsubsidized Loans charge the same interest rate for undergraduate borrowers during a given academic year. The main difference is who pays the interest during certain periods.
Direct Subsidized Loans are offered to eligible undergraduate students with financial need. The federal government generally pays the interest while you’re enrolled at least half-time, during the six-month grace period, and during qualifying deferments.
Direct Unsubsidized Loans are offered to eligible undergraduate, graduate, and professional students without a financial need requirement. Interest begins to accumulate when the loan is disbursed, even if you’re still attending school.
Subsidized loans generally cost less because the government covers interest during those qualifying periods. If you receive both types of loans, it usually makes sense to use your subsidized eligibility before taking on additional unsubsidized debt.
Our comparison of subsidized and unsubsidized student loans explains the eligibility requirements and repayment differences.
Student Loan Grace Periods and Interest Capitalization
Direct Subsidized and Unsubsidized Loans generally include a six-month grace period after you graduate, leave school, or drop below half-time enrollment.
You aren’t required to make payments during this period, but interest continues to accumulate on unsubsidized loans.
Grad PLUS loans don’t technically have a grace period. However, eligible graduate and professional borrowers receive an automatic deferment while enrolled at least half-time and for six months afterward.
Parent PLUS borrowers can request a deferment while their child is enrolled at least half-time and for an additional six months afterward.
Unpaid interest can also affect your repayment costs through capitalization. Capitalization occurs when unpaid interest is added to the loan’s principal balance. Future interest is then calculated using that higher principal amount.
For federal Direct Loans, unpaid interest doesn’t automatically capitalize when the normal grace period ends. Capitalization occurs under specific circumstances, such as after certain deferments or changes to an income-based repayment plan.
You can review your federal student loan repayment options to see how different repayment arrangements may affect your payments.
How to Get a Lower Student Loan Interest Rate
You can’t negotiate the interest rate on a new federal Direct Loan because the rate is established by law. However, private student loan lenders offer different rates based on your qualifications.
If you’re considering private student loans, several steps may help you qualify for a lower rate or reduce your total borrowing costs.
- Compare multiple lenders: Each lender uses its own pricing and eligibility criteria. Compare APRs, loan fees, repayment terms, and borrower protections before choosing an offer.
- Improve your credit score: A higher credit score may help you qualify for better private student loan rates. Paying bills on time and reducing outstanding credit card balances can strengthen your credit profile.
- Apply with a cosigner: A cosigner with strong credit and sufficient income may help you qualify for a lower interest rate. However, your cosigner also becomes legally responsible for repayment.
- Choose a shorter repayment term: Some lenders offer lower interest rates on shorter loan terms. Your monthly payment will generally be higher, but you may pay less interest overall.
- Check automatic payment discounts: Some lenders offer interest rate reductions when you enroll in automatic payments. Federal Direct Loans also offer an eligible automatic payment interest rate reduction.
- Consider refinancing: Refinancing may reduce your interest rate if your financial situation has improved. However, refinancing federal loans into private loans means permanently giving up federal repayment protections and potential forgiveness benefits.
If you don’t have someone who can cosign, you can still explore student loans without a cosigner. Federal Direct Subsidized and Unsubsidized Loans generally don’t require a credit check or cosigner.
You can also reduce your total interest costs without changing your interest rate. Borrowing less, paying accrued interest while you’re in school, and making extra principal payments can all reduce the amount you ultimately repay.
Choosing the Right Student Loan for Your Budget
The lowest interest rate isn’t always the best deal. Federal student loans generally offer stronger repayment protections, while private loans may offer lower rates to borrowers with excellent credit. The right choice depends on your borrowing needs, financial situation, and repayment plans.
Start with scholarships, grants, and federal student loans before considering private financing. If you still need to borrow, compare APRs, fees, and repayment terms from multiple lenders.
Most importantly, consider what your monthly payments will look like after graduation. A student loan should help you pay for your education without leaving you with more debt than your future budget can reasonably support.
