How Much Are Student Loan Interest Rates?

By Debbie Schwartz

How Much Are Student Loan Interest Rates?

By Debbie Schwartz

Published January 1, 2018 | Last Updated June 8th, 2023 at 01:07 pm

As you consider how to pay for college and begin to familiarize yourself with how student loans work, you’ll probably wonder how much interest rates are for student loans. Your student will have to pay back more than the principal alone – interest can dramatically increase the overall cost of school.

The good news is that it’s possible to know ahead of time how much student loan interest rates are, and to make wise choices for financing.

Federal Student Loans

Federal loans are the easiest to understand, because they all have the same interest rates and fees. When you’re looking at a federal loan, they all come from the government and have standardized policies and terms.

Interest Rates

Between July 1, 2023 and June 30, 2024, interest rates are as follows:

Subsidized and unsubsidized Stafford loans: 5.50%
Graduate Stafford loans: 7.05%
Parent PLUS loans: 8.05%

These fixed rates apply for the life of the loan. Every July 1, the government updates the interest rates, but the new rates only apply to new loans taken out during the year.

Federal laws can impact interest rates, of course, so it’s important to keep an eye on what Congress is considering as far as student interest rates and loan policies.

Student and Parent PLUS Loan Origination Fees

Federal loans have fees that are based on the amount borrowed. The fees are a set percentage of the award amount, and are deducted proportionally from each disbursement.

As of July 1, 2020, new Direct Subsidized and Unsubsidized Loans have a fee of 1.057 percent. Parent PLUS and Graduate Direct Loans have an origination fee of 4.228 percent.

Subsidized vs. Unsubsidized Loans

Another important element in federal student loans is whether or not they are subsidized. If they are, your student will pay less because interest will not accrue while they are in school full-time, or during the repayment grace period.

Unsubsidized loans accrue interest right away. Your student can either make the interest payments during school, or they can be added to the loan.

If you add the interest to the loan, the amount owed will be larger and the subsequent interest will be more, because it will be charged on the higher amount owed.

Private Student Loan Interest Rates

Private loans are an entirely different beast. There are dozens of banks willing to originate these loans, and they can have a wide variety of fees, interest rates, and terms.

You want to make sure you fully understand the terms of each loan you and your student agree to. Interest will probably start accruing immediately, similar to an unsubsidized federal loan. However, you may or may not have the option to defer those payments until graduation.

Interest rates can vary significantly, and you will encounter both fixed and variable interest rates. While variable interest rates start lower, they introduce a lot of uncertainty because you can’t know what will happen years in the future. It’s usually best to lock in a fixed interest rate if you can.

Some private loans will require your student to have a cosigner. It’s vital that your student choose a trustworthy cosigner. It’s also important for the cosigner to understand the risk, and to find out if there’s a way to remove the cosigner after a certain number of on-time payments.

Finally, private student loans may not have the terms and protections that come with a federal loan. These include income-based repayment, forbearance and deferment options, and forgiveness opportunities.

Comparing Private Student Loans

Comparing interest rates on private loans can be a major challenge, especially when you’re trying to understand what the real total cost will be. We want to make it easier for you.

Download a copy of our student loan calculator to help you understand the different interest rates lenders are offering you and the options available for each loan.

Compare Student Loan Rates From Top Lenders

Co-Signer Release	Repayment Options	Term	Interest Rates
Yes	- Flat Payment (In-School) - Full (principal & interest) - Deferred - Interest-only	5, 8, 10, 15 years	4.41% - 16.99% (Fixed) 5.49% - 16.99% (Variable) Check Rate
Yes	- Deferred - $25 Minimum Amount - In-School Interest Only	5, 7, 10, 12, 15 years	4.48% - 15.66% (Fixed) 6.03% - 15.94% (Variable) Check Rate
Yes	- Pay now or late: Make interest payments - Pay a fixed $25 payment - Defer payments until after school	10-15 years	4.50% - 15.49% (Fixed) 6.37% - 16.70% (Variable) Check Rate
Yes	- Immediate repayment - Interest-only - Fixed monthly payments in school - Fully deferred	5, 7, 10, 15 years	4.44% – 14.70% (Fixed) 5.99% – 13.97% (Variable) Check Rate
Yes	- Full payments (Principal and Interest)	5, 10, 15 years	As low as 4.39% (Fixed) As low as 6.06% (Variable) Check Rate
	- Deferred - $25 Minimum Amount - In-School Interest Only	5, 7, 10, 12, 15 years	9.63% - 15.66% (Fixed) 9.92% - 15.94% (Variable) Check Rate