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Note about changes due to COVID-19:
There have been changes to the federal student loan program as a part of the $2 trillion economic stimulus bill that passed in Congress on 3/27/2020 to help those affected by the Coronavirus.
Until 9/30/2020, no interest will accrue on federal student loans—effectively setting the interest rate at 0%. Borrowers also have the option to suspend payments without penalty, if needed. Payments made during this time will first apply to unpaid interest accrued from before 3/13/2020, then directly towards the principal balance.
Learn more about other changes on our federal student loans page.
Interest rates for student loans and student loan refinancing change all the time. It’s important to stay on top of these rate changes so you get the best deal.
For the 2019-2020 academic year, interest rates on federal student loans are set at 4.53% for undergraduate loans, 6.08% for unsubsidized graduate loans, and 7.08% for PLUS loans.
Private student loan interest rates for new student loans and refinancing change more frequently, but typically range from around 2% to 13% depending on your credit score and the lender.
On this page:
Current & Historic Federal Student Loan Interest Rates
In the following table, you will find the current and historic interest rates for federal loans. These rates coincide with the academic year that the loans were taken out (ex: Fall 2019 to Spring 2020).
It should be noted that all of these are fixed rates, meaning that they do not change over time.
|Subsidized Loans (Undergrad)||4.53%||5.05%||4.45%||3.76%||4.29%||4.66%|
|Unsubsidized Loans (Undergrad)||4.53%||5.05%||4.45%||3.76%||4.29%||4.66%|
|Unsubsidized Loans (Grad)||6.08%||6.60%||6.00%||5.31%||5.84%||6.21%|
|PLUS Loans (Grad & Parent)||7.08%||7.60%||7.00%||6.31%||6.84%||7.21%|
It should be noted that all federal loans have origination fees that increase the total cost and should be taken into account when deciding how much to borrow.
Currently, Direct Subsidized & Unsubsidized Loans have an origination fee of 1.059% while PLUS Loans have an origination fee of 4.236%.
These fees are taken out of the total amount of money you receive from the government. For example, if you take out a $20,000 Direct Unsubsidized Loan, you will only receive $19,788.20 after the fee is taken out.
Current Private Student Loan Interest Rates
Unlike federal loans, private student loan rates change much more than once a year. Private banks and lenders that offer these loans constantly update rates depending on the market.
These lenders offer different rates depending on the type of loan you choose and how qualified you are. The most important eligibility factor is your (or your cosigner’s) credit score.
Below you will find current private student loan interest rates for some of the top lenders in the industry as well as the average rates on private loans issued over the past four years. Note that, unlike federal loans, none of these lenders charge origination fees.
If you are interested in comparing private lenders, check out our Best Private Student Loans guide.
Undergraduate Student Loan Rates
|Lender||Variable APR||Fixed APR|
|PNC||4.94% – 10.10%||5.58% – 11.79%|
|College Ave||4.20% – 11.44%||5.29% – 12.78%|
|SunTrust||4.38% – 13.38%||5.35% – 14.05%|
|Sallie Mae||4.62% – 11.47%||5.74% – 11.85%|
|Citizens Bank||3.12% – 11.22%||5.74% – 11.99%|
Graduate Student Loan Rates
|Lender||Variable APR||Fixed APR|
|PNC||5.03% – 11.23%||6.01% – 12.29%|
|College Ave||4.07% – 9.37%||5.29% – 10.45%|
|SunTrust||4.38% – 9.35%||5.35% – 9.88%|
|Sallie Mae||4.87% – 10.23%||6.25% – 10.23%|
|Citizens Bank||3.12% – 10.87%||5.74% – 11.75%|
Parent Student Loan Rates
|Lender||Variable APR||Fixed APR|
|College Ave||4.07% – 9.05%||6.62% – 11.58%|
|Sallie Mae||4.50% – 10.87%||5.74% – 12.87%|
|Citizens Bank||5.43% – 8.75%||5.95% – 6.55%|
Average Private Student Loan Rates
|Loan Type||Average Interest Rate|
|Variable; not cosigned||8.81%|
|Fixed; not cosigned||9.97%|
The above table is based on a 2019 study done by LendEDU that looked at the average rates on private student loans issued from 2016 to 2019. The rates were broken down based on interest type (variable or fixed) as well as if a cosigner was present on the loan.
Current Student Loan Refinancing Interest Rates
When you refinance your student loans, your old loans will be paid off and you will be issued a new loan with a new interest rate and term length. Aside from receiving a lower rate, some borrowers may also refinance to extend their loan terms to make repayment more manageable.
Regardless of why you may want to refinance, you can find the current rates for the top lenders in the industry in the following table. Note that, like in-school private loans, none of these lenders charge an origination fee.
|Lender||Variable APR||Fixed APR|
|SoFi||2.47% – 6.99%||3.90% – 7.98%|
|College Ave||2.88% – 7.63%||3.25% – 8.00%|
|Citizens Bank||3.00% – 9.74%||3.90% – 9.99%|
|LendKey||2.68% – 8.96%||5.10% – 8.93%|
|Earnest||2.57% – 6.97%||3.89% – 7.89%|
|CommonBond||2.61% – 7.35%||3.67% – 7.25%|
|ELFI||2.80% – 6.01%||3.39% – 6.69%|
>> Read More: Should I Refinance My Student Loans?
How to Calculate How Much Interest You Will Owe
Every month, the interest amount you owe on your loan is recalculated using a daily interest formula based on your total outstanding loan amount:
Interest amount = Outstanding principal balance x Number of days since last payment x Interest rate factor
The interest rate factor is your annual interest rate divided by the number of days in the year. Your loan servicer is responsible for billing you monthly and explaining how your payments are applied to your principal balance.
You can use our student loan payment calculator to see how much your loan will cost in the long run after interest is accounted for.
>> Read More: How Student Loan Interest Works
Differences Between Variable, Mixed, and Fixed Interest Rates
If you are a student (or the parent of a student) taking out or refinancing a student loan for the first time, you’ll need to understand the different types of interest rate options you have.
All federal student loans taken out in 2006 or on have fixed rates but private loans (including refinance loans) may have fixed, variable, or hybrid/mixed rates.
Fixed Interest Rates
The interest rate you pay remains stable over the life of the loan. This means your monthly payments won’t change until the loan is paid off, forgiven, or refinanced.
- Certainty: You know exactly how much interest you’ll pay each month, so it’s easier to budget. Also, you won’t be affected if rates climb after you take out your loan.
- Cost: In most cases, the interest rate on a fixed loan will be higher in the early years than are the introductory rates on a variable loan. Thus, you may pay out more money in the short term with a fixed-rate loan and possibly in the longterm as well.
- Falling Rates: If you take out a fixed-rate loan during a time when rates are high, those rates are locked in unless you refinance the loan when interest rates drop.
Variable Interest Rates
Variable rates—which are only offered by private lenders—change over time based on a market rate, such as LIBOR or the federal funds rate.
The new interest rate applies for the reset period, which can be a month, several months, or a year. For example, interest on a variable-rate student loan with a term length of 20 years with an annual reset period would be recalculated every year and apply for the following 12 months.
Rates might go up, down, or remain unchanged depending on economic conditions, the lender’s costs, and prevailing interest rates.
- Cost: The initial interest rate on a variable loan is usually lower. This makes it easier to afford during the first year. In addition, if the base rate remains steady, the overall cost of the student loan over its lifetime might be lower.
- Caps: Many of the private student loans with variable rates have annual and lifetime caps on rates, which protects you during times of wild inflation.
- Uncertainty: It’s harder to predict your monthly payment amount, which can confound your budgeting efforts.
- Cost: You will pay much more with a variable rate loan if the base rate rises substantially. Caps help, but some loans have outrageously high caps that don’t really protect you that much.
>> Read More: Fixed vs. Variable Rate Student Loans
3) Mixed/Hybrid Interest Rates
Mixed-rate student loans are hybrids, with an initial multi-year (usually five years) fixed-rate period followed by a variable-rate period for the remainder of the loan’s lifetime. These loans are very uncommon and are only offered privately.
- Certainty Early On: Mixed-rate loans provide certainty during the early years when students experience dynamic employment conditions and convert to variable-rate loans at a time when, hopefully, borrowers are financially better able to handle the possibility of higher rates.
- Uncertainty Longterm: Mixed-rate loans can be the most expensive variety if your luck runs bad. First, you start off paying a fixed rate that is higher than the rate on a comparable variable loan. Then, if prevailing rates are high when you enter the variable phase, you’ll be paying more than you would have for the fixed-rate loan. That’s a double whammy that could cost you dearly.
How Congress Sets Federal Student Loan Interest Rates
Have you ever wondered who sets the interest rates on your student loans? The answer is Congress, which passed the Higher Education Act in 1965 and has subsequently renewed and amended it several times.
The law governing the setting of rates on federal student loans is set down in the U.S. Code, in Sections 20 U.S.C. § 1077 and § 1087. Congress passes legislation to set the rates, which are updated every year and apply from July 1 of Year 1 to June 30 of Year 2.
In August 2013, the Bipartisan Student Loan Certainty Act was signed into law, tying federal student loan interest rates to prevailing market rates.
In their current form, the interest rate levels for the various types of federal student loans are based on the yield of the 10-year Treasury Note auction, plus an increment.
Author: Dave Rathmanner
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