Student Loan Interest Rates: Federal, Private, Refinance


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

To apply for federal student loans, as well as grants and work-study, complete the free application for federal student aid – this can help. Any student, regardless of financial need, generally qualifies for unsubsidized student loans, and students with financial need may qualify for subsidized loans. Subsidized loans are a better deal because the government pays interest accrued while you are in school.

Federal student loan fees are calculated as a percentage of the total loan amount and deducted proportionately from each loan disbursement, meaning you will receive slightly less than the amount you borrow.

Source: US Department of Education, Federal Student Aid
Interest rate in effect on July 1 of each year. Loan fees in effect on October 1 of each year.

Private Student Loan Interest Rates by Lender

It’s usually best to maximize your federal student loan options before taking out a private student loan. If you need to, shop around first to ensure you get the lowest rate you qualify for. If you don’t meet a lender’s credit requirements, you can apply with a co-signer who does.

Current private student loan interest rates, updated monthly:

Student loan refinance rates by lender

Consider refinancing a student loan if your credit score is at least in the 600s, you have enough income to pay debts and other expenses, and you’re comfortable forgoing federal benefits like repayment based income and the forgiveness of public service loans. Before you refinance, shop around to find the lowest rate you qualify for.

Current student loan refinance rates, updated monthly:

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

Interest on student loans accrues while you’re in school — unless you have subsidized federal loans — so you’ll owe more than you originally borrowed when you start paying back. You can save on interest by:

  • Pay off the interest before the end of your grace period. When your student loans are repaid, the unpaid interest will be capitalized or added to your principal balance. Avoid costly interest compounding by making monthly interest-only payments or paying a fixed amount — say $25 — while you’re in school. Alternatively, pay interest during your grace period using money from your degree or income from your first post-graduate job.

  • Avoid, if possible, income-tested reimbursements. Federal income-based repayment plans may prevent cash-strapped borrowers from defaulting, but they also cost longer-term borrowers more interest. If you can afford to make federal loan repayments on the standard 10-year repayment plan, do so.

  • Monitor your overall financial health. Although you’ll save the most interest on your student loan by paying off the loan as soon as possible, other financial goals take priority. Before paying extra on student debt, create an emergency fund, contribute to a 401(k) or IRA, and pay off high-interest debt such as credit cards.

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.


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