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While federal student loan rates are set on an annual basis, private student loan rates can change at any time; making it all the more important to review current rates to increase your chances of receiving the most affordable loan.
Current student loan interest rates for 2021-22
Here are today’s student loan rates for those looking to take out a new student loan.
|Rate type||Fixed||Fixed or variable|
|Undergrad||3.73%||0.94% – 12.99%|
|Graduate||5.28% or 6.28%||0.99% – 13.09%|
|Parent||6.28%||1.04% – 12.99%|
|Full breakdown||Full breakdown|
Here are today’s student loan rates for those looking to refinance existing student loans.
- Student loan refinance rates currently range between 1.86% to 9.15%. Click here for a full breakdown.
Current & historic federal student loan interest rates
With the passing of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), no interest will accrue on federal student loans in repayment until August 31, 2022—effectively setting the interest rate at 0%. Payments made during this time will first apply to unpaid interest accrued before March 13, 2020, then directly towards the principal balance of the loan.
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 2021 to Spring 2022).
It should be noted that all of these are fixed rates, meaning that they do not change over time.
|Subsidized loans (undergrad)||3.73%||2.75%||4.53%||5.05%||4.45%||3.76%||4.29%|
|Unsubsidized loans (undergrad)||3.73%||2.75%||4.53%||5.05%||4.45%||3.76%||4.29%|
|Unsubsidized loans (grad)||5.28%||4.30%||6.08%||6.60%||6.00%||5.31%||5.84%|
|PLUS loans (grad & parent)||6.28%||5.30%||7.08%||7.60%||7.00%||6.31%||6.84%|
Federal student loans are issued by the Department of Education to eligible students who fill out the Free Application for Federal Student Aid, or FAFSA. The interest rates on these loans are set once a year and are based on the 10-year Treasury note.
Here’s how interest works for different borrowers:
- For undergraduates, subsidized loans are the preferred option as the government will pay the interest that accrues on the loan while you are in school. However, these loans do require you to prove financial need. Unsubsidized loans, on the other hand, do not require financial need, but you’ll be responsible for repaying interested accrued while in school.
- For graduates, unsubsidized loans are the preferred option as they come with a lower interest rate than the Grad PLUS loan. Additionally, Grad PLUS loans require you to not have an adverse credit history to be approved. For both loans, you are responsible for interest accrued while in school.
- For parents, the only option is the Parent PLUS loan. To be eligible, you must be the biological or adoptive parent of a dependent undergraduate student and not have an adverse credit history. Payments for this loan begin immediately, unless you file for deferment. During deferment, you’ll be responsible for any accrued interest.
An added cost to federal loans worth mentioning comes in the form of an origination fee. Unlike most private lenders, the Department of Education deducts a fee from your loan amount prior to disbursement. This deduction means that your loan amount will be a bit higher than the funds disbursed to your school.
Here are the current and historical origination fees for federal student loans.
|Subsidized loans (undergrad)||1.06%||1.06%||1.06%||1.07%||1.07%||1.07%||1.07%|
|Unsubsidized loans (undergrad)||1.06%||1.06%||1.06%||1.07%||1.07%||1.07%||1.07%|
|Unsubsidized loans (grad)||1.06%||1.06%||1.06%||1.07%||1.07%||1.07%||1.07%|
|PLUS loans (grad & parent)||4.24%||4.24%||4.25%||4.26%||4.28%||4.27%||4.29%|
If we use the origination fee for Subsidized loans for the 2021/22 school year, we can demonstrate the impact this fee will have on the money you receive from your loan. For example, if you took out a $20,000 Subsidized loan, the money disbursed to your school would actually be $19,788 after deducting the $212 fee.
Current private student loan interest rates
Unlike federal loans, private student loan rates change much more than once a year. These rates are determined by each bank, credit union, or online lender and are based on current market conditions.
Private lenders review several factors, including your credit score, to determine eligibility. These factors are also used in determining what interest rate you receive within the range offered by the lender.
Below, you will find private student loan interest rates from several lenders in the industry.
Undergraduate student loan rates
|Lender||Variable (APR)||Fixed (APR)|
|College Ave||4.20% – 11.44%||5.29% – 12.78%|
|Earnest||2.74% – 11.44%||4.39% – 12.78%|
|Sallie Mae||1.25% – 11.35%||4.25% – 12.59%|
|LendKey||3.84% – 10.56%||4.86% – 10.49%|
|Ascent||2.40% – 12.39%||3.38% – 13.72%|
|Citizens Bank||3.12% – 11.22%||5.74% – 11.99%|
To compare your options, check out our picks for the best private student loans.
Graduate student loan rates
|Lender||Variable APR)||Fixed (APR)|
|College Ave||4.07% – 9.37%||5.29% – 10.45%|
|LendKey||3.84% – 10.56%||4.86% – 10.49%|
|Ascent||5.71% – 11.17%||6.64% – 11.92%|
|Citizens Bank||3.12% – 10.87%||5.74% – 11.75%|
To compare your options, check out our picks for the best graduate student loans.
Parent student loan rates
|Lender||Variable (APR)||Fixed (APR)|
|College Ave||4.07% – 9.05%||6.62% – 11.58%|
|Citizens Bank||5.43% – 8.75%||5.95% – 6.55%|
To compare your options, check out our picks for the best parent student loans.
Current student loan refinancing interest rates
Refinancing student loans is a smart option if you can receive a lower interest rate than the rate on your existing loans. By receiving a lower rate, you reduce the total interest you’ll pay over the life of your loan.
Remember, refinancing is done by private lenders, not the federal government. This means that federal borrowers should only refinance their loans if they receive a lower interest rate and don’t need the added benefits of federal loans, such as income-driven repayment plans or student loan forgiveness.
Here are the student loan refinance rates from several lenders.
|Lender||Variable (APR)||Fixed (APR)|
|Earnest||2.57% – 6.97%||3.89% – 7.89%|
|ELFI||2.80% – 6.01%||3.39% – 6.69%|
|Citizens Bank||3.00% – 9.74%||3.90% – 9.99%|
|Splash Financial||1.99% – 7.10%||2.88% – 7.27%|
To compare your options, check out our picks for the best student loan refinance companies.
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
Difference between variable, fixed, and hybrid 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 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
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