If you’re a student or parent researching how student loan interest rates have changed, you’re likely preparing to take out a loan or trying to understand the cost implications. Knowing what’s happening in the rate environment can help you select the best possible financing option. We’ll share how federal and private student loan interest rates […]
The post Student Loan Interest Rates by Year appeared first on LendEDU.
If you’re a student or parent researching how student loan interest rates have changed, you’re likely preparing to take out a loan or trying to understand the cost implications. Knowing what’s happening in the rate environment can help you select the best possible financing option.
We’ll share how federal and private student loan interest rates have changed over the years. You’ll learn about the factors influencing these rates, the differences between federal and private loan rates, and how to find the lowest rates available.
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Just like other types of loans, the interest rates on federal student loans increase and decrease with changes in market conditions. However, unlike some loans where rates change daily or monthly, the interest rates for federal student loans change once a year.
The fixed rates for federal student loans are set annually and are effective for funds disbursed during a 12-month period beginning on July 1 and ending on June 30. This fixed-rate period is designed to align with a typical academic calendar year.
The U.S. government sets the rates using a formula established by law via the Higher Education Act of 1965 (HEA), as amended. The fixed rates for federal student loans can’t exceed the maximums set by the HEA, which are based on 10-year Treasury note rates plus a specified percentage (aka spread).
Your rates on the federal student loans disbursed to you are fixed for life at the percentages set by law each academic year.
The following section summarizes the fixed rates for federal student loans to undergraduate borrowers for the most recent 12 years.
The fixed rates for Direct Loans (Subsidized and Unsubsidized) for undergraduate borrowers are shown below:
| Date of first disbursement | Fixed rate |
| 7/1/24 – 6/30/25 | 6.53% |
| 7/1/23 – 6/30/24 | 5.50% |
| 7/1/22 – 6/30/23 | 4.99% |
| 7/1/21 – 6/30/22 | 3.73% |
| 7/1/20 – 6/30/21 | 2.75% |
| 7/1/19 – 6/30/20 | 4.53% |
| 7/1/18 – 6/30/19 | 5.05% |
| 7/1/17 – 6/30/18 | 4.45% |
| 7/1/16 – 6/30/17 | 3.76% |
| 7/1/15 – 6/30/16 | 4.29% |
| 7/1/14 – 6/30/15 | 4.66% |
| 7/1/13 – 6/30/14 | 3.86% |
Our expert explains why rates have changed
The Student Loan Certainty Act was signed into law in 2013 and changed the way interest rates on federal student loans were calculated from previous years. Under this Act, the interest rate calculation is based on the 10-year Treasury bill rate, with new rates set every year on July 1.
Unlike federal student loans, each lender sets its private student loan rates. The rate you’ll get for a federal student loan is set by law without regard to your creditworthiness or financial situation. Most private lenders consider your credit and other factors to set your rate.
Lenders set rates based on what’s happening in the economy and their own internal policies. When setting rates, each lender considers such factors as how much it costs to make the loan, the amount of risk associated with your loan, and how much risk it’s willing to take.
You can expect to pay a higher rate if the lender believes it faces more risk in the market or with your finances. The interest rates for all consumer loans tend to follow what’s happening with the federal (fed) funds rate set by the Federal Reserve, which has increased in recent years.
The following chart shows how the Fed Funds rate has changed in the most recent 10 years:
As with other types of loans, when the Federal Reserve raises or lowers the fed funds rate, it influences the rate lenders charge. This happens because changes to the fed funds rate affect the lender’s cost of money. These cost changes are generally passed on to the borrower soon after they happen.
Federal student loan rates are fixed, but private student loan rates can be fixed or variable and may be higher than federal rates.
If you’ve already taken out a fixed-rate loan, you won’t feel the effect of rate changes unless you get another loan. However, if you have a variable loan, your interest rate could increase the next time it’s set to adjust (e.g., monthly, quarterly, yearly).
Make sure to read your loan agreement to understand the type of rate you have, how it’s set, and when (if ever) it will change. Doing so will help you avoid any surprises. Also, shop around if you choose to get a private student loan. The rates can vary by lender.
Graduate student loan interest rates work the same as any other student loan rates. The rates for federal student loans are set by the U.S. government annually in accordance with law, whereas each individual lender sets the rates for private student loans.
Graduate students will always get a fixed rate for a federal student loan, but the rate for a private student loan can be fixed or variable. For both types of loans, the interest rates can increase or decrease as market and economic conditions change.
Rates tend to be lower when economic conditions are good (e.g., periods of low inflation and unemployment). They’re often higher when market conditions are weak or unstable.
The fixed interest rates for federal student loans to graduate or professional students are set the same as those for undergraduate loans. The U.S. government sets the rates each year using a formula established by law.
The following sections summarize the fixed interest rates for federal student loans to graduate and professional borrowers for the most recent 12 years.
The fixed rates for Direct Unsubsidized Loans for graduate and professional borrowers are shown below:
| Date of first disbursement | Fixed rate |
| 7/1/24 – 6/30/25 | 8.08% |
| 7/1/23 – 6/30/24 | 7.05% |
| 7/1/22 – 6/30/23 | 6.54% |
| 7/1/21 – 6/30/22 | 5.28% |
| 7/1/20 – 6/30/21 | 4.30% |
| 7/1/19 – 6/30/20 | 6.08% |
| 7/1/18 – 6/30/19 | 6.60% |
| 7/1/17 – 6/30/18 | 6.00% |
| 7/1/16 – 6/30/17 | 5.31% |
| 7/1/15 – 6/30/16 | 5.84% |
| 7/1/14 – 6/30/15 | 6.21% |
| 7/1/13 – 6/30/14 | 5.41% |
The fixed rates for Direct PLUS loans for parents or graduate and professional borrowers are shown below:
| Date of first disbursement | Fixed rate |
| 7/1/24 – 6/30/25 | 9.08% |
| 7/1/23 – 6/30/24 | 7.05% |
| 7/1/22 – 6/30/23 | 7.54% |
| 7/1/21 – 6/30/22 | 6.28% |
| 7/1/20 – 6/30/21 | 5.30% |
| 7/1/19 – 6/30/20 | 7.08% |
| 7/1/18 – 6/30/19 | 7.60% |
| 7/1/17 – 6/30/18 | 7.00% |
| 7/1/16 – 6/30/17 | 6.31% |
| 7/1/15 – 6/30/16 | 6.84% |
| 7/1/14 – 6/30/15 | 7.21% |
| 7/1/13 – 6/30/14 | 6.41% |
Private graduate student loan interest rates are set by individual lenders and are influenced by market conditions, the lender’s cost of funds, and the borrower’s credit profile. Unlike federal loans, private loan rates can be fixed or variable.
These lenders adjust their rates based on economic indicators, the lender’s financial health, and competition within the lending market.
Because these rates aren’t standardized, they can vary by lender. Student loan borrowers with higher credit scores and lower debt-to-income ratios often receive better rates. For these reasons, shopping around for the best possible rate is crucial.
Staying up to date with what’s happening to student loan interest rates is vital for current and prospective borrowers because these interest rates affect the total cost of borrowing and the amount you’ll repay over the life of the loan.
Knowing the current rates can help prospective borrowers estimate the total cost of their education. Federal loans offer fixed rates, providing stability and predictability. In contrast, private loans might offer variable rates that start lower but increase over time.
Current borrowers should stay informed about interest rates to evaluate whether refinancing is beneficial. Refinancing at a lower rate could reduce your monthly payments and the total interest paid. Plus, you’ll need to plan for potential payment changes if you have a variable rate.
To prepare for borrowing and repayment, it’s essential to:
Being aware of rate trends can help you make informed decisions about borrowing and refinancing.
Depending on your or your cosigner’s credit score and income, federal student loans might offer the lowest interest rates. They come with added benefits, such as student loan forgiveness programs, income-driven repayment plans, and deferment options. It’s wise to maximize federal student loans before considering private loans.
When turning to private student loans, shopping around for the best rate is crucial. Each lender sets its own rates and policies, resulting in significant variations.
To find the lowest possible student loan rates, follow these steps:
These steps can help you navigate the student loan market, find the lowest interest rates, and minimize the cost of your education.
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