The new interest rates on federal student loans for 2026-27 school year are set to rise slightly.
The interest rates on federal student loans are fixed interest rates for the life of the loan. New interest rates apply to loans disbursed between July 1 and June 30.
The interest rates are based on the high yield of the last 10-year Treasury Note auction in May, which was on May 12, 2026.
The interest rates on the 10-year Treasury Note are influenced by a short-term interest rate called the Federal Funds Rate, which is set by the Federal Reserve Board. The Federal Reserve Board has been keeping this rate high in an attempt to control inflation, which remains stubbornly above the Federal Reserve Board’s 2% target.
Interest rates on private student loans and on old fixed-rate federal student loans are not affected by the change in interest rates on new federal student loans.
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Student Loan Interest Rates For 2026 - 2027
The new interest rates for 2026-27 federal student loans disbursed on or after July 1, 2025 will be:
- 6.52% for undergraduate Federal Direct Stafford Loans
- 8.07%for graduate Federal Direct Stafford Loans
- 9.07%for Federal Direct Grad PLUS Loans
- 9.07% for Federal Direct Parent PLUS Loans
That’s a increase of 0.13% compared with last year.
That's not the smallest change in the interest rates. Aside from several years in which the interest rates did not change from the previous year (1997-98, 2007-08, 2012-13), interest rates dropped by 0.05% from 2003-04 to 2004-05.
Previous Years' Interest Rates
This table shows how the interest rates has increased significantly during the pandemic.
Year | Undergraduate Direct Loan | Graduate Direct Loan | PLUS Loans |
|---|---|---|---|
2026 - 2027 | 6.518% | 8.068% | 9.068% |
2025 - 2026 | 6.392% | 7.942% | 8.942% |
2024 - 2025 | 6.533% | 8.083% | 9.083% |
2023 - 2024 | 5.498% | 7.048% | 8.048% |
2022 - 2023 | 4.993% | 6.543% | 7.543% |
2021 - 2022 | 3.734% | 5.284% | 6.284% |
2020 - 2021 | 2.750% | 4.300% | 5.300% |
Interest Rate Formula For New Federal Student Loans
The interest rates on federal student loans are set based on a formula that adds a fixed margin based on the type of loan to the high yield from the last 10-year Treasury Note auction in May. The margins are as follows:
- High yield + 2.05% for the Federal Direct Stafford Loan for undergraduate students, capped at 8.25%
- High yield + 3.60% for the Federal Direct Stafford Loan for graduate students, capped at 9.50%
- High yield + 4.60% for the Federal Direct Grad PLUS Loan, capped at 10.50%
- High yield + 4.60% for the Federal Direct Parent PLUS Loan, capped at 10.50%
The high yield on the 10-year Treasury Note was 4.468% for the auction on May 12, 2026. Thus, the new interest rates are as follows:
- 6.518% for the Federal Direct Stafford Loan for undergraduate students, up from 6.392%
- 8.068% for the Federal Direct Stafford Loan for graduate students, up from 7.942%
- 9.068% for the Federal Direct Grad PLUS Loan, up from 8.942%
- 9.068% for the Federal Direct Parent PLUS Loan, up from 8.942%
Impact Of Rising Interest Rates
The increase in interest rates yields a slight decrease in the monthly student loan payment of about $0.72 per month per $10,000 borrowed, assuming a 10-year repayment term, as compared with last year’s interest rates.
These tables show the impact of the change in interest rates on the monthly student loan payment for each type of federal education loan.
Here's Undergraduate Direct Loans:
Year | Undergraduate Direct Loan | Monthly Payment Per $10,000 | Change vs. LY |
|---|---|---|---|
2026 - 2027 | 6.518% | $113.64 | 0.57% |
2025 - 2026 | 6.392% | $113.00 | -0.63% |
2024 - 2025 | 6.533% | $113.72 | 19.2% |
2023 - 2024 | 5.498% | $108.52 | 13.7% |
2022 - 2023 | 4.993% | $106.03 | 11.1% |
2021 - 2022 | 3.734% | $99.99 | 4.8% |
2020 - 2021 | 2.750% | $95.41 | 0% |
Current Interest Rates On Private Student Loans
The interest rates on private student loans depend on the type of loan and the credit score of the borrower (and cosigner, if any). They also depend on the repayment term.
The interest rates for private student loans range from about 2.65% to 16.5% (fixed) and 3.03% to 18% (variable).
The interest rates for private refinance loans range from about 3.99% to 11% (fixed) and 3.65% to 11% (variable).
Interest rates on private student loans typically change monthly. You can see a list of private loan lenders and rates here.
Common Questions
How much does 0.57% rise increase costs over 10 years?
It will cost you about $0.64 per month for every $10,000 borrowed. So, over 10 years, that adds up to $76.84 for every $10,000 borrowed.
Should I prioritize federal over private loans with this rate increase?
You should always prioritize federal student loans over private loans, specifically because federal loans offer a variety of features like loan forgiveness, income driven repayment, and hardship options. Private loans don't offer those features.
Is refinancing federal loans advisable now?
It's rarely a good idea to refinance your federal loans. The only exception is if you don't qualify for loan forgiveness and don't take advantage of any income driven repayment plans or hardship options. Even then, you need to shop and compare private loan rates and see if they are lower - they may not be.
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Editor: Robert Farrington
Mark Kantrowitz is an expert on student financial aid, scholarships, 529 plans, and student loans. He has been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. Mark has written for the New York Times, Wall Street Journal, Washington Post, Reuters, USA Today, MarketWatch, Money Magazine, Forbes, Newsweek, and Time. You can find his work on Student Aid Policy here.
Mark is the author of five bestselling books about scholarships and financial aid and holds seven patents. Mark serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education. He previously served as a member of the board of directors of the National Scholarship Providers Association. Mark has two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU).