As of August 12, 2026, current student loan rates for federal undergraduate loans are set at 6.54% for the 2026-2027 academic year. Graduate federal loans carry a rate of 8.54%, while federal PLUS loans for parents and graduate students have a rate of 9.54%. Private student loan rates vary widely depending on your credit score, income, and lender, but typically range from about 4% to 15% as of mid-2026.
Your actual rate depends on whether you borrow federal or private loans, and for private loans, your creditworthiness and whether you choose a fixed or variable rate. Understanding these rates can help you decide which loans to use first and how to plan for repayment.
Federal student loan rates for 2026-2027
The U.S. Department of Education sets federal student loan rates each year based on the 10-year Treasury note auction in May. Rates for the 2026-2027 academic year were announced in late May 2026 and apply to loans disbursed between July 1, 2026, and June 30, 2027.
| Loan Type | Fixed Interest Rate (2026-2027) | Who It’s For |
|---|---|---|
| Direct Subsidized and Unsubsidized Undergraduate Loans | 6.54% | Undergraduate students with financial need (subsidized) or all undergraduates (unsubsidized) |
| Direct Unsubsidized Graduate Loans | 8.54% | Graduate or professional students |
| Direct PLUS Loans (Parent PLUS and Grad PLUS) | 9.54% | Parents of dependent undergraduates and graduate/professional students |
These rates are fixed for the life of the loan, so they won’t change over time. Federal loans also come with borrower protections like income-driven repayment plans, deferment, and forbearance options that private loans typically don’t offer.
How federal rates are determined
Congress sets the formula for federal student loan rates in law. The rate is the high yield of the 10-year Treasury note at the final auction in May, plus a fixed add-on percentage. For 2026-2027, the add-ons are 2.05% for undergraduate loans, 4.05% for graduate loans, and 5.05% for PLUS loans.
Because Treasury yields fluctuate, rates can change from year to year. For example, the 2025-2026 rates were slightly lower, but the 2026-2027 rates increased due to higher Treasury yields.
Private student loan rates in 2026
Private student loans are offered by banks, credit unions, and online lenders. Rates are not set by the government and depend on your credit score, income, and whether you apply with a co-signer. As of August 2026, typical private student loan rates are:
- Fixed rates: approximately 4.5% to 15% APR
- Variable rates: approximately 4% to 13% APR (may change over time)
- Rates for borrowers with excellent credit (720+ FICO) often start near the low end
- Borrowers with no credit history or lower scores may see rates above 10%
Private loans often require a co-signer if you have limited credit history. A co-signer with good credit can help you qualify for a lower rate. Always compare offers from multiple lenders to find the best rate for your situation.
Fixed vs. variable rates
Fixed rates stay the same for the entire loan term, so your monthly payment is predictable. Variable rates start lower but can increase or decrease over time based on market indexes like the Secured Overnight Financing Rate (SOFR). If you expect interest rates to rise, a fixed rate may be safer. If you plan to pay off the loan quickly, a variable rate might save you money initially.
How to get the best student loan rate
To secure the lowest possible rate on a private student loan, you should take these steps before applying:
- Check your credit score and report for errors.
- Add a creditworthy co-signer if your credit is limited or below 700.
- Compare rate quotes from at least three different lenders.
- Consider a shorter repayment term (e.g., 5 or 7 years) to get a lower rate.
For federal loans, you don’t need to shop around because rates are fixed by law. However, you should always max out federal loans before turning to private loans because federal loans offer more flexible repayment options.
Current rate trends and outlook
Interest rates in the broader economy have been relatively stable in 2026, with the Federal Reserve holding its benchmark rate steady after cuts in 2025. However, the 10-year Treasury yield, which drives federal student loan rates, has risen slightly in 2026, leading to the current rates. If Treasury yields continue to rise, next year’s rates could go up again, but that’s uncertain.
For private loans, rates are influenced by the prime rate and SOFR. If the Fed raises rates in the future, variable rate loans will become more expensive. Fixed-rate private loans are less affected by short-term changes but may still move with longer-term bond yields.
Final thoughts
Knowing what current student loan rates are helps you plan your borrowing strategy for the 2026-2027 school year. Federal undergraduate loans at 6.54% are a solid baseline, while private loans can be lower or higher depending on your credit. Always exhaust federal aid first, then compare private offers carefully, and consider the long-term cost of your loans. Your future self will thank you for making an informed decision today.
Frequently Asked Questions
What is the current interest rate for federal student loans?
As of August 2026, the fixed interest rate for federal undergraduate student loans is 6.54% for the 2026-2027 academic year. Graduate loans are 8.54%, and PLUS loans are 9.54%.
Are private student loan rates higher than federal rates?
Private student loan rates can be lower or higher than federal rates, depending on your credit score and the lender. Borrowers with excellent credit might get rates around 4-5%, while those with poor credit could see rates above 10-15%.
How often do student loan interest rates change?
Federal student loan rates change once a year for new loans, set in May for the following academic year. Private loan rates can change at any time, and variable rates can adjust monthly or quarterly based on market indexes.
Can I get a lower student loan rate with a co-signer?
Yes, adding a creditworthy co-signer can help you qualify for a lower interest rate on a private student loan, especially if you have limited credit history. A co-signer with a good credit score can reduce your risk to the lender.
Should I choose a fixed or variable rate student loan?
Choose a fixed rate if you want predictable payments and plan to repay over a longer term. Choose a variable rate if you can handle potential rate increases and expect to pay off the loan quickly, as variable rates often start lower.
