If you’re asking “how much are interest rates on student loans?” you’re not alone. In short, federal student loan interest rates for the 2026-2027 school year range from about 5.5% to 9.1%, depending on the loan type. Private student loan rates can be higher or lower, often starting around 5% and going up to 15% or more.
Your exact rate depends on the loan type, your credit history, and whether you choose a fixed or variable rate. This guide explains current federal rates, how private loans compare, and what you can do to get the best deal.
Federal Student Loan Interest Rates (2026-2027)
The U.S. Department of Education sets federal loan rates each year for new loans. These rates are fixed, meaning they stay the same for the life of the loan. For loans disbursed between July 1, 2026, and June 30, 2027, the rates are as follows:
| Loan Type | Interest Rate | Who It’s For |
|---|---|---|
| Direct Subsidized Loan | 5.50% | Undergraduates with financial need |
| Direct Unsubsidized Loan | 5.50% | Undergraduates (no financial need required) |
| Direct Unsubsidized Loan (Graduate) | 7.05% | Graduate or professional students |
| Direct PLUS Loan (Parent or Grad) | 9.08% | Parents of dependent undergrads or graduate students |
These rates are for new loans taken out for the 2026-2027 academic year. If you already have federal loans, your interest rate is fixed at the rate you signed up for, so it won’t change.
Private Student Loan Interest Rates
Private student loans come from banks, credit unions, and online lenders. Rates vary widely and are based on your credit score, income, and whether you have a co-signer. As of August 2026, typical private loan rates look like this:
- Fixed rates: Usually start around 5% and can go up to 15% or higher.
- Variable rates: Often start lower, around 4% to 8%, but they can increase over time.
- Co-signer requirement: Most students need a co-signer to get a good rate.
- Repayment terms: You can choose repayment terms from 5 to 20 years, which affects your monthly payment and total interest.
Unlike federal loans, private lenders check your credit history. If you have no credit or a low score, your rate will be higher. A co-signer with good credit can help you get a lower rate.
How Interest Accrues on Student Loans
Interest on student loans is calculated daily based on your principal balance and your interest rate. The formula is: interest = principal × rate × (days / 365). For example, if you borrow $10,000 at 5.5%, you’ll accrue about $1.51 per day in interest.
For subsidized federal loans, the government pays the interest while you’re in school at least half-time and during grace periods. For unsubsidized loans, interest starts accruing immediately, even while you’re in school. If you don’t pay it, the interest is added to your balance, which is called capitalization.
To minimize interest, consider making interest payments while you’re in school. Even small monthly payments can reduce the total amount you owe later.
Fixed vs. Variable Interest Rates
Fixed rates stay the same for the entire life of the loan. This gives you predictable monthly payments. Variable rates can change every month or quarter, based on market indexes. They often start lower than fixed rates, but they carry the risk of rising.
For most students, a fixed-rate loan is a safer choice because you know exactly what you’ll pay over time. Variable rates can be tempting if you plan to pay off your loan quickly, but if you take longer, a rate increase could cost you more.
When comparing loans, always look at the Annual Percentage Rate (APR), which includes fees and other costs. The APR gives you a better picture of the true cost of the loan.
How to Get the Lowest Interest Rate
You can’t control the federal rates, but you can take steps to get the best private loan rate:
- Improve your credit score: Pay bills on time, reduce debt, and check your credit report for errors.
- Get a co-signer: A co-signer with good credit can lower your rate significantly.
- Compare multiple lenders: Shop around and get rate quotes from at least three different lenders.
- Choose a shorter repayment term: A shorter term usually comes with a lower rate, but higher monthly payments.
- Consider a variable rate only if you can handle risk: If you plan to pay off the loan in a few years, a variable rate might save you money.
Also, remember that federal loans offer benefits like income-driven repayment plans and loan forgiveness programs that private loans don’t. Always exhaust federal loan options before turning to private loans.
Summary
Interest rates on student loans vary by loan type and lender. Federal rates for 2026-2027 are 5.50% for undergraduate loans, 7.05% for graduate loans, and 9.08% for PLUS loans. Private rates generally range from 5% to 15%, depending on your credit and co-signer. To save money, compare offers, improve your credit, and consider making interest payments while in school. Always read the fine print and understand how interest accrues before you borrow.
Frequently Asked Questions
What is the current interest rate for federal student loans?
For the 2026-2027 school year, federal undergraduate loans have a fixed interest rate of 5.50%, graduate loans are 7.05%, and PLUS loans are 9.08%.
Do private student loans have higher interest rates than federal loans?
Private loans can be higher or lower than federal rates, depending on your credit. Rates typically start around 5% but can go up to 15% or more, so it’s important to compare.
How can I lower my student loan interest rate?
You can lower your rate by improving your credit score, getting a co-signer with good credit, comparing multiple lenders, or choosing a shorter repayment term.
Do student loan interest rates change over time?
Fixed rates stay the same for the life of the loan, but variable rates can change. Federal loans are always fixed, while private loans may offer both options.
When does interest start accruing on student loans?
Interest on unsubsidized loans starts accruing immediately. On subsidized loans, the government pays the interest while you’re in school at least half-time and during grace periods.
