Key Points
- Federal student loan interest rates hit a record low of 2.75% for undergraduates in 2020-21, driven by near-zero Treasury yields. They have since climbed to 6.52% for 2026-27.
- Since 2013, rates are set each May using the 10-year Treasury note yield plus a fixed add-on.
- Graduate PLUS loans are being eliminated starting July 1, 2026.
Federal student loan interest rates for undergraduates stood at just 2.75% in 2020. By 2024-25, that same rate had risen to 6.53% — more than doubling in four years.
For the 2026-27 academic year, rates ticked down slightly to 6.52% for undergraduates, 8.07% for graduate students, and 9.07% for PLUS loans, reflecting a modest drop in 10-year Treasury yields from the prior year.
Understanding where rates stand (and how they got here) matters more now than it has in years.
The formula that sets them, the history behind them, and the structural changes coming in 2026-27 all have direct consequences for students and families borrowing student loans to pay for college.
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A Brief History Of Federal Student Loan Interest Rates
The current system is about 12 years old. Before it, rates went through two distinct phases.
Before 2006, loans carried variable interest rates — reset annually based on 91-day Treasury bill yields plus a spread. Rates could change year to year even for existing borrowers, making it difficult to project total loan costs over time.
Starting in 2006, Congress moved to fixed rates: 6.80% for unsubsidized Stafford loans and 7.90% for Direct PLUS loans. These rates were uniform for all borrowers and didn't change over the life of the loan.
The College Cost Reduction and Access Act of 2007 then phased down subsidized Stafford rates year by year. When those rate cuts were set to expire and rates threatened to double back to 6.80% in July 2013, Congress passed the Bipartisan Student Loan Certainty Act, which created the Treasury-indexed formula still in use today.
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Historical Federal Student Loan Rates By Academic Year (2006 - Present)
Here is the history of the last 20 years of student loan interest rates:
Academic Year | Undergraduate | Graduate | PLUS |
|---|---|---|---|
2026-27 | 6.52% | 8.07% | 9.07% |
2025-26 | 6.39% | 7.94% | 8.94% |
2024-25 | 6.53% | 8.08% | 9.08% |
2023-24 | 5.50% | 7.05% | 8.05% |
2022-23 | 4.99% | 6.54% | 7.54% |
2021-22 | 3.73% | 5.28% | 6.28% |
2020-21 | 2.75% | 4.30% | 5.30% |
2019-20 | 4.53% | 6.08% | 7.08% |
2018-19 | 5.05% | 6.60% | 7.60% |
2017-18 | 4.45% | 6.00% | 7.00% |
2016-17 | 3.76% | 5.31% | 6.31% |
2015-16 | 4.29% | 5.84% | 6.84% |
2014-15 | 4.66% | 6.21% | 7.21% |
2013-14 | 3.86% | 5.41% | 6.41% |
2012-13 | 3.40% (sub) / 6.80% (unsub) | 6.80% | 7.90% |
2011-12 | 3.40% (sub) / 6.80% (unsub) | 6.80% | 7.90% |
2010-11 | 4.50% (sub) / 6.80% (unsub) | 6.80% | 7.90% |
2009-10 | 5.60% (sub) / 6.80% (unsub) | 6.80% | 7.90% |
2008-09 | 6.00% (sub) / 6.80% (unsub) | 6.80% | 7.90% |
2007-08 | 6.80% | 6.80% | 7.90% |
2006-07 | 6.80% | 6.80% | 7.90% |
How Federal Student Loan Interest Rates Are Determined
Congress doesn't pick an arbitrary number each year. Since the Bipartisan Student Loan Certainty Act of 2013, federal student loan interest rates have been tied to the yield of the 10-year U.S. Treasury note at an auction held in May. The Department of Education adds a fixed percentage depending on loan type:
- Undergraduate subsidized and unsubsidized loans: 10-year Treasury yield + 2.05%
- Graduate unsubsidized loans: 10-year Treasury yield + 3.60%
- PLUS loans (parents and graduate students): 10-year Treasury yield + 4.60%
Statutory caps exist: 8.25% for undergraduate loans, 9.50% for graduate unsubsidized loans, and 10.50% for PLUS loans. Those caps have never been reached under the current formula, but at 9.08%, PLUS loans came close in 2026–27.
Rates are fixed at disbursement. Once you take out a loan, your rate doesn't change. But new borrowers each July face whatever the formula produces that year.
What A Student Loan Rate Change Means For Your Wallet
It's important to remember that federal student loan rates are fixed - meaning they don't change over the repayment term. However, most students borrow a student loan each year of college - meaning four different loans with different rates. The difference between borrowing at pandemic-era lows and today's rates is significant over a full repayment term.
Take a first-year undergraduate borrowing the maximum $5,500 in federal loans for 2024–25 at 6.53%. Over a standard 10-year repayment term, that loan will accumulate roughly $2,000 in interest. The same loan at the 2020–21 rate of 2.75% would cost about $840 in interest — a difference of more than $1,100 on a single year's borrowing.
Over a full four-year degree, with typical federal borrowing near $27,000, the difference between pandemic-era lows and current rates can add up to more than $5,000 in additional interest paid over a 10-year repayment term.
Graduate students face a steeper bill. A grad student borrowing $20,500 (the annual unsubsidized loan maximum) at the 2025–26 rate of 7.94% will pay roughly $9,450 in interest over 10 years. At the 2020–21 rate of 4.30%, that same loan cost about $4,690 in interest.
PLUS loan borrowers face the highest rate of any federal loan at 8.94% for 2025–26, plus a 4.228% origination fee deducted from each disbursement. Borrowing $10,000 through a PLUS loan means roughly $9,577 actually reaches the student or school.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.