What is the interest rate on student loans? — Current federal rates and typical private loan ranges

If you’re borrowing for college or grad school, interest rate matters: it determines how much extra you’ll pay beyond the principal and influences your monthly payment and total cost. Below is a clear, up-to-date snapshot of how student-loan interest works in the U.S., what federal borrowers are paying right now, how those rates are set, and the typical range you’ll see from private lenders — plus realistic examples so you can compare.

Federal student loan rates (current academic year)

For loans first disbursed between July 1, 2025 and June 30, 2026, the U.S. Department of Education set these fixed rates:

Direct Subsidized and Direct Unsubsidized Loans (undergraduate) — 6.39%.
Direct Unsubsidized Loans (graduate/professional) — 7.94%.
Direct PLUS Loans (parents & graduate/professional borrowers) — 8.94%.

Those interest rates are fixed for the life of each loan — meaning the rate you receive when the loan is first disbursed doesn’t change later on. There are also origination (loan) fees charged up front: for loans first disbursed on/after Oct 1, 2020, the fee is about 1.057% for Subsidized/Unsubsidized loans and about 4.228% for PLUS loans.

How federal rates are set (plain English)

Federal loan rates aren’t decided arbitrarily. Every year Congress ties new fixed rates for loans disbursed in the next award year to the 10-year U.S. Treasury note yield from late spring, plus a statutory add-on (a fixed margin) that differs by loan type. The resulting figure is then rounded and capped by statutory maximums where applicable. The new rates become effective each July 1 and are fixed for any loan first disbursed during that 12-month window.

Bottom line: federal rates move with Treasury yields — when Treasury yields fall, new federal rates can drop; when yields rise, new federal rates go up. But the rate you get stays locked in for your loan’s lifetime.

Private student loans — what borrowers actually see

Private student loans (banks, credit unions, and fintech lenders) are underwritten like other consumer loans: your credit score, income, debt-to-income ratio, employment, and whether you add a creditworthy co-signer largely determine the rate. Private loans come in fixed and variable-rate options.

Typical ranges lenders advertise today (late 2025):

Fixed APRs: roughly about 3% to 16%–18% depending on the lender, term, and borrower profile. Many top lenders show fixed rate offers starting in the low-to-mid single digits for the best applicants, with maximums in the mid- to high-teens.
Variable APRs: typically start a little lower than fixed for the best applicants (sometimes low-to-mid single digits) but can move up and be capped in the mid- to high-teens. Market moves (SOFR, Treasury yields) drive these rates.

Different sites report slightly different advertised ranges (Bankrate, Forbes, Money), but they’re consistent: private loan costs vary widely. A creditworthy borrower with a strong co-signer might lock a private loan under 5% fixed; a weaker profile without a co-signer could see rates above 15%.

Private vs. federal — when each makes sense

Federal before private: Always exhaust federal borrowing options first. Federal loans offer income-driven repayment plans, deferment/forbearance options, potential forgiveness programs, and generally don’t require credit checks (except PLUS). Those borrower protections can be worth more than a slightly lower private rate. (See federal rates above.)
Use private loans cautiously: Private loans can cover funding gaps once federal limits are reached. They can sometimes offer lower rates for top applicants — but they usually lack the protections and repayment flexibility of federal loans (fewer or no IDR options, no PSLF eligibility except in rare cases). Compare fixed vs. variable, check for autopay discounts, and consider refinancing later if rates fall and you have a stable income.

Example: how much interest looks like in practice

To make the differences concrete, here are monthly-payment examples for a $10,000 loan repaid over 10 years (120 months) — amortizing (standard) repayment:

Federal undergraduate rate — 6.39% → monthly ≈ $112.99.
Federal graduate rate — 7.94% → monthly ≈ $121.01.
Federal PLUS rate — 8.94% → monthly ≈ $126.35.
Private (example low-rate) — 4.0% → monthly ≈ $101.25.
Private (example high-rate) — 15.0% → monthly ≈ $161.33.

(These payments are illustrative amortization calculations — they don’t include origination fees, autopay discounts, or other lender credits.)

If you want to compare a different principal, term, or interest rate I can run that math for you — or show a simple table — but these examples give a sense: every percentage point matters, especially on larger balances and longer terms.

Fees, caps, and other gotchas

Origination fees: Federal loans can have mandatory origination fees deducted from disbursement (see ~1.057% for Direct Loans and ~4.228% for PLUS for recent years). Private loans may advertise “no fees,” but check for application, origination, or prepayment penalties (most reputable private student lenders do not charge prepayment penalties).
Rate caps for federal loans: Congress sets maximum caps for each loan type (these limit how high the statutory formula can push federal rates). For private loans, check the loan’s contract for a cap on variable rates (many have caps, but caps vary widely).
Autopay and discounts: Many private lenders and some refinancers offer interest-rate discounts (commonly 0.25%) for enrolling in automatic payments. That can tip the math in favor of a private lender for qualified borrowers.

Strategy: how to choose and reduce cost

Borrow federal first. You get protections and flexible repayment options you won’t get from most private lenders.
If you need private loans: shop multiple lenders, compare APRs (not just the nominal rate), check fixed vs. variable, and factor in discounts and fees. Use a co-signer only if necessary and plan for how you’ll remove them later (refinancing in your own name after graduation is common).
Pay attention to term length. Longer terms lower monthly payments but increase total interest. If you can afford higher monthly payments, shorter terms save money.
Refinance later if it makes sense. Once you have stable income and strong credit, refinancing with a private lender can lower your rate — but be careful: refinancing federal loans into private loans generally eliminates federal protections, so only refinance federal loans if you are certain you won’t need those protections.

Quick FAQ

Q: Do federal loan rates change while I’m repaying?
A: No. Federal rates are fixed for the life of a loan once it’s disbursed. New loans in later award years will have different rates, but your existing loans keep their original fixed rate.

Q: Are private student loan rates negotiable?
A: Sometimes. Lenders may offer lower rates to highly qualified applicants or if you enroll in autopay, and some will consider underwriting adjustments if you have a strong co-signer. Shopping multiple offers is the best way to see negotiating room.

Q: How often do federal rates change?
A: Annually — rates for the next award year are announced each spring and go into effect July 1 for loans disbursed July 1–June 30.

Bottom line

For 2025–2026, federal fixed rates are 6.39% (undergrad), 7.94% (graduate unsubsidized), and 8.94% (PLUS), with modest origination fees. Those rates are set annually using the 10-year Treasury yield + statutory add-ons and are fixed for each loan’s life.
Private loan rates vary widely — roughly low single digits for the best borrowers up to mid/high teens for riskier profiles; variable rates change with market indexes. Shop around, compare APRs and terms, and prioritize federal borrowing when possible.

If you want, I can:

run the monthly payment numbers for your projected borrowing (enter principal, expected rate, and term), or
compare two lenders’ advertised rate offers side-by-side, or
show how refinancing would change payments and total interest given your current balance and a target new rate.