Learn more about private student loans
If you have started repaying your federal student loans, their interest rates have been set at 0% until after August 31, 2022, and no payments are due before that date.
If you’re still borrowing for education, the federal student loan interest rate for undergraduates is 4.99% for the 2022-23 school year. Federal rates for unsubsidized graduate student loans and parent loans are higher – 6.54% and 7.54%, respectively. Rates for the coming year go into effect July 1.
Private student loan interest rates can sometimes be lower than federal rates, but approval for the lowest rates requires excellent credit. If you have good credit, you may be able to refinance existing student loans to get a lower rate.
Current Student Loan Interest Rates
Federal student loan interest rates are increasing for the 2022-23 school year and apply to loans disbursed between July 1, 2022 and July 1, 2023. Interest rates for all new direct federal loans to undergraduates are 4.99%, up from 3.73% previously. in 2021-22. Direct unsubsidized graduate student loan rates are 6.54%, down from 5.28% previously. Rates for PLUS loans, which are aimed at graduate students and parents, are 7.54%, down from 6.28%.
Interest rates on federal student loans by year
Private Student Loan Interest Rates by Lender
Student loan refinance rates by lender
Average student loan interest rate
The average interest rate on student loans is 5.8% for all indebted households, according to a 2017 report from New America, a nonpartisan nonprofit think tank. This includes both the federal government and private student loans — about 90% of all student debt is federal.
With an interest rate of 5.8% on $30,000 in student loans, a borrower would pay approximately $9,600 in interest over 10 years.
The average interest rate on student loans is higher in some groups, according to the report. For example, the average rate is 6.3% among households whose borrower did not obtain a university degree and 6.6% among households whose income is less than $24,000.
If you have several student loans with different rates, the weighted average interest rate is the rate you will get if you consolidate loans through the federal government. Federal consolidation won’t lower your average interest rate, but refinancing with a private lender might.
Student loan interest rate calculator
How Student Loan Interest Rates Work
Interest rates on student loans work differently depending on whether the loan is federal or private. For federal loans, each borrower who takes out the same type of federal loan in a given year has the same interest rate. For private loans, borrowers with higher credit scores generally qualify for lower rates and borrowers with lower credit scores get higher rates.
Congress sets interest rates each year based on the 10-year Treasury bill
Most have fees charged as a percentage of the total loan amount
Rates are fixed for the term of the loan
Interest rates are generally based on credit
Most private lenders do not charge origination fees
Variable rates are subject to change monthly or quarterly
Tips for Repaying Student Loan Interest
Key terms in this story
Fixed interest: An interest rate that does not change over the life of a loan. All federal student loans have fixed interest rates, but private loans can offer fixed or variable interest rates. Fixed interest is the safest option because you don’t have to worry about your rate and payment going up.
Floating interest: Variable interest rates may change monthly or quarterly depending on the loan agreement and come with capped rates of up to 25%. Variable rate loans are riskier than fixed rate loans, but they can save you money if the timing is right.
Private student loan: Education funding from banks, credit unions, and online lenders instead of the federal government. Private loans are best used to fill funding gaps after maximizing federal loans.