The interest rate on student loans is the extra cost you pay to borrow money for college, expressed as a percentage of the loan amount each year. For federal student loans, rates are set by Congress and change each July for new loans. For private loans, rates depend on your credit and the lender’s terms.
In 2026, federal undergraduate loan rates are fixed, meaning they stay the same for the life of the loan. Graduate and parent loans have higher fixed rates. Private loan rates can be fixed or variable, so they may change over time.
Knowing your interest rate matters because it directly affects your monthly payment and the total amount you repay. Even a small difference in rate can add up to thousands of dollars over a 10-year repayment term.
Federal student loan interest rates for 2026-2027
The U.S. Department of Education sets federal loan rates each year based on the 10-year Treasury note auction in May. Rates for loans disbursed between July 1, 2026, and June 30, 2027, are listed below.
| Loan Type | Interest Rate (Fixed) |
|---|---|
| Undergraduate Direct Subsidized and Unsubsidized | 6.53% |
| Graduate Direct Unsubsidized | 8.08% |
| Direct PLUS (Parent and Graduate) | 9.08% |
These rates are fixed for the life of the loan. They apply to loans first disbursed during that period, not to existing loans.
Remember that federal loan rates are set by law and do not depend on your credit score. Every borrower with the same loan type gets the same rate for that year.
How federal interest rates are set
Federal student loan interest rates are tied to the high yield of the 10-year Treasury note, plus a fixed add-on percentage. For example, undergraduate loans use the Treasury rate plus 2.05 percentage points. Graduate loans add 3.60 points, and PLUS loans add 4.60 points.
The rate is rounded up to the nearest one-eighth of a percent. This formula was established by Congress in 2013 and remains in effect today.
Because Treasury rates fluctuate, federal loan rates can go up or down each year. However, once you take out a loan, your rate is locked in and will not change.
Private student loan interest rates
Private student loans are offered by banks, credit unions, and online lenders. Their interest rates are not set by the government. Instead, they are based on your credit score, income, and other factors, as well as the lender’s pricing.
Private loan rates can be fixed or variable. Fixed rates stay the same, while variable rates can change periodically, often tied to an index like the Secured Overnight Financing Rate (SOFR).
As of 2026, private student loan rates typically range from about 4% to 15% or more, depending on creditworthiness and whether you choose fixed or variable. Borrowers with strong credit may qualify for lower rates, while those with limited credit may need a co-signer.
Unlike federal loans, private loans do not offer income-driven repayment or loan forgiveness programs. That is why experts recommend exhausting federal aid first.
Fixed vs. variable interest rates
Fixed rates remain the same for the entire repayment period. This makes budgeting easier because your monthly payment stays predictable.
Variable rates start lower than fixed rates but can increase over time. If interest rates rise, your monthly payment could go up, making it harder to manage.
For most student borrowers, a fixed-rate loan is safer because it protects you from future rate hikes. Choose a variable rate only if you plan to repay quickly and are comfortable with risk.
How interest accrues on student loans
Interest on student loans accrues daily, meaning it is calculated based on your outstanding principal balance each day. The daily interest rate is your annual rate divided by 365.
For example, if you have a $10,000 loan at 6.53% interest, the daily interest is about $1.79. Over a year, that adds up to roughly $653 in interest.
On subsidized federal loans, the government pays the interest while you are in school at least half-time and during grace periods. On unsubsidized loans, interest accrues from the day the loan is disbursed, and it is capitalized (added to your principal) if you do not pay it while in school.
Tips to reduce your student loan interest costs
Here are some practical steps you can take to lower the total interest you pay:
- Make interest payments while you are in school to prevent capitalization on unsubsidized loans.
- Choose a shorter repayment term, like 5 or 7 years, if you can afford higher monthly payments.
- Set up autopay to get a 0.25% interest rate reduction on most federal loans.
- Consider refinancing private loans (or federal loans) if you have strong credit and can get a lower rate, but weigh the loss of federal protections.
How to find your current student loan interest rate
Your federal loan interest rate is listed on your loan disclosure statement and in your account on the Federal Student Aid website. You can also contact your loan servicer.
For private loans, check your monthly statement or your lender’s online portal. Your rate is also shown in your original loan agreement.
If you have multiple loans, you might have different rates. Keeping track of each rate helps you decide which loans to pay off first—usually the highest-rate ones.
Summary
In 2026, federal student loan interest rates are 6.53% for undergraduates, 8.08% for graduate unsubsidized loans, and 9.08% for PLUS loans. Private loan rates vary by credit and lender, with fixed or variable options. Always exhaust federal loans first, make interest payments when possible, and choose fixed rates for stability. Understanding your rate helps you plan repayment and save money over time.
Frequently Asked Questions
What is the current interest rate on federal student loans?
For loans disbursed between July 1, 2026, and June 30, 2027, the rate is 6.53% for undergraduate loans, 8.08% for graduate unsubsidized loans, and 9.08% for PLUS loans.
Do student loan interest rates change after you take out the loan?
No, federal student loans have fixed rates that stay the same for the life of the loan. Private loans may have variable rates that can change.
How can I lower my student loan interest rate?
You can lower your rate by signing up for autopay (usually a 0.25% reduction) or by refinancing with a private lender if you have good credit, but refinancing federal loans means losing federal benefits.
What is the average private student loan interest rate in 2026?
Private student loan rates vary widely, typically ranging from about 4% to 15% depending on your credit score, income, and whether you choose a fixed or variable rate.
Do I have to pay interest on student loans while in school?
For subsidized federal loans, the government pays the interest while you are in school. For unsubsidized loans, interest accrues, and you can choose to pay it or let it capitalize.
