USA Student loan Interest Rates 2024

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USA Student loan Interest Rates
USA Student loan Interest Rates

USA Student loan:-Student loans can be useful for filling financial gaps when scholarships, grants and other forms of aid fall short, but the money isn’t free. In addition to your principal balance (the amount you originally borrowed), student loans carry interest rates. These interest rates determine how much money you’ll ultimately owe and will also influence your monthly payment. Compare interest rates before taking out a loan to ensure your debt will be manageable once you graduate.

Federal student loans for undergraduates currently have an interest rate of 5.5 percent for the 2022-23 school year, while graduate students have interest rates of 7.05 percent or 8.05 percent for unsubsidized loans or Direct PLUS loans, respectively. Private student loan interest rates range from 4 percent to 14 percent and are based primarily on your credit score.

Current student loan interest rates

About 92 percent of student loan debt is federal, with interest rates ranging from 4.99 percent to 7.54 percent. Average private student loan interest rates, on the other hand, can range from just under 4 percent to almost 15 percent. 

While federal student loan rates are the same for every borrower, private student loan rates range based on the lender, the type of interest rate (fixed or variable) and the borrower’s credit score.

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Federal student loan interest rates

LOAN TYPEBORROWERFIXED INTEREST RATELOAN FEE
Direct Subsidized Loans and Direct Unsubsidized LoansUndergraduate students5.5%1.057% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2024
Direct Unsubsidized LoansGraduate or professional students7.05%1.057% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2024
Direct PLUS LoansParents and graduate or professional students8.05%4.228% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2024

Private student loan rates (graduate and undergraduate)

LENDERVARIABLE APR*FIXED APR*
College Ave5.59% to 16.99%5.05% to 16.99%
Earnest5.62% to 16.20%4.42% to 15.90%
Lend Key6.07% to 11.11%4.39% to 11.31%
SoFi5.99% to 13.97%4.44% to 14.70%

Refinance student loan interest rates

LENDERFIXED APR*VARIABLE APR*
Earnest4.96% to 8.99%5.72% to 8.94%
Lend Key7.11% to 11.18%N/A
SoFi5.24% to 9.99%6.24% to 9.99%

Average student loan rates 2024

LOAN FIRST DISBURSEDUNDERGRADUATE DIRECT SUBSIDIZED LOANSUNDERGRADUATE DIRECT UNSUBSIDIZED LOANSGRADUATE OR PROFESSIONAL DIRECT UNSUBSIDIZED LOANSDIRECT PLUS LOANS
July 1, 2023 – June 30, 20245.50%5.50%7.05%8.05%
July 1, 2022 – June 30, 20234.99%4.99%6.54%7.54%
July 1, 2021 – June 30, 20223.73%3.73%5.28%6.28%
July 1, 2020 – June 30, 20212.75%2.75%4.30%5.30%
July 1, 2019 – June 30, 20204.53%4.53%6.08%7.08%
July 1, 2018 – June 30, 20195.05%5.05%6.60%7.60%
July 1, 2017 – June 30, 20184.45%4.45%6.00%7.00%
July 1, 2016 – June 30, 20173.76%3.76%5.31%6.31%
July 1, 2015 – June 30, 20164.29%4.29%5.84%6.84%
July 1, 2014 – June 30, 20154.66%4.66%6.21%7.21%
July 1, 2013 – June 30, 20143.86%3.86%5.41%6.41%

How are student loan interest rates set?

Federal student loan interest rates and private student loan interest rates are closely related. When federal student loan rates drop, private student loan rates are likely to follow. This is because both types of loans tend to follow larger economic market trends.

Federal student loan interest rates

Each spring, Congress sets federal student loan interest rates based on the high yield of the last 10-year Treasury note auction in May. New rates apply to student loans disbursed from July 1 to June 30 of the following year. Federal loans are fixed, meaning that the rate will not fluctuate for the life of the loan. The interest rate you receive on a federal student loan is not determined by your credit score or financial history.

Interest charges differ between subsidized and unsubsidized loans. For federal subsidized loans, the government pays your interest charges for you while you’re in school at least half time, during your grace period and while you’re in deferment. The amount you’ll owe once you start paying includes only your original principal balance, loan fees and interest accrued moving forward.

With federal unsubsidized loans, interest charges start accruing immediately after funds are disbursed. If you choose to hold off on making loan payments until after graduation or your six-month grace period, the accumulated student loan interest gets added to your principal balance when the loan enters repayment.

Private student loan interest rates

Private student loans are offered by banks, credit unions and online lenders. Interest rates vary from lender to lender. Many private student loan lenders provide both fixed and variable rates. If you choose the variable rate option, your interest rate will fluctuate according to market conditions.

Most student loan lenders set rate ranges based on the Libor or the Secured Overnight Financing Rate indices. 

However, while rates are tied to this benchmark, private lenders also typically evaluate you or your co-signer’s credit score, income and financial history to determine your interest rate. Generally, the better your financial health and credit score, the lower your interest rates will be. 

In order to access this information, many lenders will run a soft credit pull as part of the prequalification process. This type of credit inquiry doesn’t affect your credit and will allow you to see your potential terms and interest rates. However, if you decide to proceed with the application process, the lender will have to do a hard credit inquiry, which can knock your credit score down a few points, to approve you for the loan.

To make loans more accessible, some lenders also factor in your work and academic history, potential future earnings and more.

How has the coronavirus affected student loan interest rates?

When the coronavirus hit in March 2020 and the Federal Reserve Board cut interest rates, student loan rates plummeted. Federal student loan rates were at their lowest point in years, and borrowers could take out private student loans or refinance existing loans with rock-bottom rates as well. Federal student loan interest was waived until Sept. 2023.

Sky-high inflation has forced the Fed to raise interest rates over the course of 2022, in an effort to keep the economy under control. These rate increases drive higher interest rates across sectors, including student loans.

How will student loan rates change in 2023?

The federal funds rate increased to 5.25-5.5 percent in Sept. 2023 and has steadily increased for the past two years. That means interest rates for both federal and private student loans will potentially go up as well, making your debt more expensive. 

The Biden presidency and student loans

While the president has no say in student loan interest rates, President Joe Biden has been seeking other ways to make college more affordable for students and reduce student debt burden. In August 2022, he announced a plan to forgive up to $20,000 in federal student loan debt for millions of eligible students. Although the Supreme Court rejected this plan, the Biden administration continues efforts to make loan forgiveness accessible to more borowers.

How to calculate student loan interest

Calculating your student loan interest can help you determine your monthly budget. To calculate how much interest you pay each month, use the following steps:

  1. Find your daily interest rate. Divide your annual interest rate by 365.
  2. Determine your daily interest accrual charge. Multiply your daily interest rate by your remaining principal balance.
  3. Calculate your monthly payment. Multiply that daily interest accrual by the number of days in your billing cycle.

Let’s say you’re charged 5 percent interest on your $10,000 loan every month. Here’s what those steps look like:

  1. 0.05 (annual interest rate) / 365 = 0.000137
  2. $10,000 (principal balance) x 0.000137 = 1.37
  3. 1.37 x 30 (number of days in billing cycle) = $41.10

In this scenario, you’ll pay $41.10 in interest your first month. As you pay down the principal balance, less of your monthly payment will go toward interest.

Some private loans carry a variable rate, so the daily interest rate may fluctuate over the life of the loan. You can also use a student loan calculator to calculate your monthly interest charge.

The difference between subsidized and unsubsidized student loans

Federal student loans can be either subsidized or unsubsidized. The primary difference between the two options are the way you’ll pay the interest and your total debt after graduation. Unsubsidized loans start accruing interest immediately after they’re disbursed, while with subsidized loans, interest is not charged until you enter repayment.

Direct Unsubsidized Loans

  • Who pays interest costs? The borrower.
  • What’s the lifetime maximum limit? $31,000 for dependent undergraduate students, $57,500 for independent undergraduate students and $138,500 for most graduate or professional students.
  • Do you need to demonstrate financial need? No.
  • Who can borrow? Undergraduate students, graduate students and professional degree students.
  • Are there extra costs involved? 1.057 percent fee for loans disbursed on or after Oct. 1, 2020, and before Oct. 1, 2023.

Direct Subsidized Loans

  • Who pays interest costs? The U.S. Department of Education pays interest while the student is enrolled in school at least half time, during the six-month postgraduation grace period and during deferment. The borrower pays interest during regular repayment periods.
  • What’s the lifetime maximum limit? $23,000.
  • Do you need to demonstrate financial need? Yes.
  • Who can borrow? Undergraduate students.
  • Are there extra costs involved? 1.057 percent fee for loans disbursed on or after Oct. 1, 2020, and before Oct. 1, 2023.

The difference between fixed and variable rates

Fixed interest rates are a type of interest rate that doesn’t change over your loan term, so you’ll know upfront how much your total cost to borrow will be and what your monthly payments will look like. All federal loans have fixed rates.

Variable interest rates are a type of interest rate that changes based on market conditions, so your monthly payment may increase or decrease periodically. These changes typically happen on a monthly, quarterly or annual basis. Private student loans can have either fixed or variable rates.

Is it better to choose a fixed or variable rate student loan?

Although fixed-rate student loans tend to have higher starting rates than variable-rate loans, with a fixed rate your payments will remain the same over the life of the loan. Fixed interest rates also protect you against a rising rate environment.

Variable-rate loans, on the other hand, tend to have lower starting rates and, depending on market conditions, it’s possible you could end up paying more or less over time. But that’s a big “if.” 

In the end, whether a fixed or a variable-rate loan is the best option will depend on what you feel comfortable with. If you like predictability, a fixed rate is the way to go, but if you’d like to try your luck, then a variable rate may be the better fit.

How can I reduce my student loan interest rate?

If you’re looking to lower your student loan interest rate, you have a few options:

  • Improve your credit score before applying: If you’re applying for a loan from a private lender, you’ll likely go through a credit check. The better your credit score, the lower the rate you’ll receive. Before applying, check your credit reports for errors and avoid applying for other forms of credit.
  • Apply with a co-signer: Many student loan borrowers don’t have much credit to their name. If this is your situation, you may want to add a co-signer to your loan. Adding a co-signer with good credit will improve your creditworthiness and could help you get lower rates. Some lenders require a co-signer, especially for undergraduate borrowers.
  • Choose a variable rate: It’s a gamble, but choosing a variable rate over a fixed one could cause your interest rate to drop during economic downturns. However, keep in mind that you also risk your interest rate rising.
  • Refinance old loans: If you took out a student loan when interest rates were high, you may be able to refinance into a lower interest rate. This is especially true if you have a better credit score now than when you first applied. Just remember that if you refinance a federal student loan, you’ll lose benefits like coronavirus forbearance and income-driven repayment plans.

How to pay off student loan interest

Student loan interest can add significantly to the overall cost of your loan — often thousands of dollars. To minimize how much you pay in interest, you can:

  • Opt for interest-only payments while in school. Though you’re not required to make payments while you’re in school, many lenders offer the option of making interest-only payments. This prevents interest accrual. Some also allow you to make small payments against the principal.
  • Make biweekly payments. If you can afford it, try making half-payments on your loans every two weeks instead of one full payment every month. This helps you pay off your loans faster and puts more of your payment toward the principal rather than interest.
  • Put any extra funds toward your student loans. If you receive a tax refund or another one-time sum of money, send it to your lender and specify that you want to put it toward your principal amount. This is a good way to decrease your loan amount and the total amount of time you spend paying your loans, which cuts down on how much interest you pay overall.

Interest Rates and Fees for Federal Student Loans

If you receive a federal student loan, you will be required to repay that loan with interest. Make sure you understand how interest is calculated and the fees associated with your loan. Both of these factors will impact the amount you will be required to repay. Remember that interest rates and fees are generally lower for federal student loans than private student loans. Student loan payments have restarted, and regular interest rates have resumed. Borrowers can lower their payments, even to $0, by enrolling in the new SAVE plan.

Restarting Student Loan Payments

Current Federal Interest Rates

The interest rate for a federal student loan varies depending on

  • the loan type and
  • the first disbursement date of the loan (for most types of federal student loans).

The table below provides interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2023, and before July 1, 2024.

Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.

Interest Rates for Direct Loans First Disbursed on or After July 1, 2023, and Before July 1, 2024

Loan TypeBorrower TypeFixed Interest Rate
Direct Subsidized Loans and Direct Unsubsidized LoansUndergraduate5.50%
Direct Unsubsidized LoansGraduate or Professional7.05%
Direct PLUS LoansParents and Graduate or Professional Students8.05%

All interest rates shown in the chart above are fixed rates. A fixed rate will not change for the life of the loan. If your loan was disbursed before July 1, 2023, you likely have a different interest rate.

What is interest?

Interest is additional money that you pay to a lender as a cost of borrowing money. Interest is calculated as a percentage of the unpaid principal amount that you borrowed.

Unlike other forms of debt, such as credit cards and mortgages, Direct Loans are “daily interest” loans. On daily interest loans, interest accrues (adds up) every day.

If your loans are subsidized, you are not responsible for paying the interest that accrues while you’re in school. If your loans are unsubsidized, you’re responsible for all the interest that accrues, even while you’re in school. Learn about the differences between subsidized and unsubsidized loans.

How Interest Is Calculated

A daily interest formula determines the amount of interest that accrues (adds up) on your loan each day. This formula consists of multiplying your loan balance by the number of days since you made your last payment and multiplying that result by the interest rate factor.

Simple daily interest formula:

Interest Amount = (Outstanding Principal Balance x Interest Rate Factor) x Number of Days Since Last Payment

What is the interest rate factor?

The interest rate factor is used to calculate the amount of interest that accrues on your loan. You can find your interest rate factor by dividing your loan’s interest rate by the number of days in the year.

How Interest Adds Up

It’s your responsibility to pay any interest that accrues (adds up) on your loan(s). And, in some cases, unpaid interest can capitalize (be added to your principal balance). On a traditional repayment plan (Standard, Graduated, or Extended), your monthly loan payment covers all the interest that accrues between monthly payments. So no additional unpaid interest will accrue while you’re making payments on one of these plans. But unpaid interest can add up in some situations, such as if you’re on an income-driven repayment (IDR) plan or if you’re not making payments.

On Income-Driven Repayment (IDR) Plans

Unpaid interest may accrue if you’re repaying your loans under an IDR plan. Under an IDR plan, your monthly loan payment can sometimes be less than the amount of interest that accrues between your payments. In this case, your payment won’t cover all of your interest, so an amount of unpaid interest will add up each month. This unpaid interest will still be your responsibility to pay until your loan is forgiven (or paid in full).

During Forbearance

You don’t have to make monthly payments during periods of forbearance. But interest continues to accrue during periods of forbearance.

During Deferment for Unsubsidized Loans

You don’t have to make monthly payments during periods of deferment. But if you have an unsubsidized loan, interest continues to accrue during periods of deferment.

During School and Grace Periods for Unsubsidized Loans

You’re not required to make monthly payments while you’re in school at least half-time or during your grace period. But if you have an unsubsidized loan, interest continues to accrue while you’re in school and during the grace period.

What happens when interest capitalizes?

When your unpaid interest capitalizes, it increases the outstanding principal amount due on your loan. Then your interest is recalculated based on that higher principal balance, increasing the overall cost of your loan. And depending on your repayment plan, capitalization may also cause your monthly payment amount to increase.

When does unpaid interest capitalize?

Unpaid interest on Direct Loans and Federal Family Education Loan (FFEL) Program loans managed by the U.S. Department of Education (ED) capitalizes

  • after a deferment on an unsubsidized loan; or
  • if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Unpaid interest on FFEL Program loans not managed by ED may capitalize

  • after a deferment on an unsubsidized loan;
  • after a forbearance on any type of loan;
  • after the grace period on an unsubsidized loan; or
  • if you are repaying your loans under the income-based repayment (IBR) plan and no longer qualify to make payments based on income or leave the IBR plan.

Example of What Happens When Interest Capitalizes

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. On this loan, the amount of interest that accrues (adds up) each day is $1.86 (find out how interest is calculated).

In this example, you’re in a deferment for six months. During the deferment, you do not pay off the interest as it accrues. In this case, the loan will accrue $340 of unpaid interest. At the end of the deferment, the accrued interest of $340 will capitalize (be added to your principal balance).

You’ll then be charged interest on the higher principal balance of $10,340. Based on this increased principal balance, the amount of interest that accrues each day will also increase (to $1.93 per day). This will result in you paying more over the course of repaying your loan balance.

Paying Down Your Principal Balance

No payment you make will go toward any of your loan principal until you’ve paid all your unpaid interest.

Follow these steps to see how much of your payment will go toward your principal balance.

  1. Use the interest calculation formula explained above to determine how much interest has accrued (added up) since your last payment.
  2. Subtract the amount of accrued interest from your monthly payment and any other outstanding interest.
  3. See the number that’s left. This number is how much of your payment will be applied to your outstanding principal balance. This amount may continue to be $0 until all outstanding interest has been paid.

Example of Paying Interest and Principal

Say you have a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate. The amount of interest that accrues (adds up) per day is $1.86.

Let’s assume you’re repaying your loan under the Standard Repayment Plan. In this repayment plan, your monthly payment would be $115.

It has been 30 days since your last payment, and there was no other interest outstanding when you made your last payment. In this case, $55.80 in interest will have accrued.

Subtracting this amount from $115 results in a total of $59.20. So $59.20 would be applied to your outstanding principal balance of $10,000.

Under any income-driven repayment plan, your monthly payment amount may sometimes be less than the amount of interest that accrues on your loans. This is called negative amortization.

Fees for Federal Student Loans

Most federal student loans have loan fees. These fees are a percentage of the total loan amount.

A loan fee comes out of the amount of money that is disbursed (paid out) to you while you’re in school. This means the money you receive will be less than the amount you actually borrow. You’re responsible for repaying the entire amount you borrowed and not just the amount you received. The chart below shows the loan fees for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after Oct. 1, 2019.

Loan Fees for Direct Subsidized Loans and Direct Unsubsidized Loans

First Disbursement DateLoan Fee
On or after 10/1/20 and before 10/1/241.057%
On or after 10/1/19 and before 10/1/201.059%

Loan Fees for Direct PLUS Loans

First Disbursement DateLoan Fee
On or after 10/1/20 and before 10/1/244.228%
On or after 10/1/19 and before 10/1/204.236%

Loans first disbursed prior to Oct. 1, 2019, have different loan fees.

Previous Years’ Interest Rates

For most loans, the interest rate depends on the year it was first disbursed.

Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.

Interest Rates for Loans Disbursed July 1, 2006–July 1, 2023

The following table provides interest rates for Direct Loans and Federal Family Education Loan (FFEL) Program loans1 first disbursed on or after July 1, 2006, and before July 1, 2023.

Fixed Interest Rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans* – Undergraduate Borrowers

First Disbursement DateFixed Interest Rate
7/1/22–6/30/234.99%
7/1/21–6/30/223.73%
7/1/20–6/30/212.75%
7/1/19–6/30/204.53%
7/1/18–6/30/195.05%
7/1/17–6/30/184.45%
7/1/16–6/30/173.76%
7/1/15–6/30/164.29%
7/1/14–6/30/154.66%
7/1/13–6/30/143.86%
7/1/11–6/30/133.4%
7/1/10–6/30/114.5%
7/1/09–6/30/105.6%
7/1/08–6/30/096.0%
7/1/06–6/30/086.8%

Fixed Interest Rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans* – Graduate or Professional Borrowers**

First Disbursement DateFixed Interest Rate
7/1/06–6/30/126.8%

Fixed Interest Rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans* – Undergraduate Borrowers

First Disbursement DateFixed Interest Rate
7/1/22–6/30/234.99%
7/1/21–6/30/223.73%
7/1/20–6/30/212.75%
7/1/19–6/30/204.53%
7/1/18–6/30/195.05%
7/1/17–6/30/184.45%
7/1/16–6/30/173.76%
7/1/15–6/30/164.29%
7/1/14–6/30/154.66%
7/1/13–6/30/143.86%
7/1/06–6/30/136.8%

Fixed Interest Rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans* – Graduate or Professional Borrowers

First Disbursement DateFixed Interest Rate
7/1/22–6/30/236.54%
7/1/21–6/30/225.28%
7/1/20–6/30/214.30%
7/1/19–6/30/206.08%
7/1/18–6/30/196.6%
7/1/17–6/30/186%
7/1/16–6/30/175.31%
7/1/15–6/30/165.84%
7/1/14–6/30/156.21%
7/1/13–6/30/145.41%
7/1/06–6/30/136.8%

Fixed Interest Rates for Direct PLUS Loans – Parents and Graduate or Professional Borrowers

First Disbursement DateFixed Interest Rate
7/1/22–6/30/237.54%
7/1/21–6/30/226.28%
7/1/20–6/30/215.30%
7/1/19–6/30/207.08%
7/1/18–6/30/197.6%
7/1/17–6/30/187%
7/1/16–6/30/176.31%
7/1/15–6/30/166.84%
7/1/14–6/30/157.21%
7/1/13–6/30/146.41%
7/1/06–6/30/137.9%

Fixed Interest Rates for Federal PLUS Loans* – Parents and Graduate or Professional Borrowers

First Disbursement DateFixed Interest Rate
7/1/06–6/30/108.5%

*These loans were made under the Federal Family Education Loan (FFEL) Program. No new FFEL Program loans have been made since July 1, 2010.

**As of July 1, 2012, graduate or professional students are no longer eligible to receive subsidized loans.

Interest Rates for Loans Disbursed Before July 1, 2006

Most loans (excluding Perkins Loans) first disbursed before July 1, 2006, have variable interest rates. These variable interest rates can change each year (from July 1 of one year through June 30 of the following year).

Interest rates for these loans are not displayed on this site. For information about any variable-rate loans you may have, contact your loan servicer.

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