The federal student loan interest rate for undergraduates is 4.45% for the 2017-18 school year. Federal rates for unsubsidized graduate student loans and parent loans are higher — 6.00% and 7.00%, respectively. Private student loan interest rates can be lower than federal rates, but approval for the lowest rates requires excellent credit. If you have good credit, you may be able to refinance existing student loans to get a lower rate.
Current student loan interest rates
|Refinance student loans|
|Fixed||3.09% to 8.34%|
|Variable||2.55% to 8.23%|
|Private student loans|
|Fixed||4.25% to 15.18%|
|Variable||3.62% to 13.36%|
|Federal student loans (fixed)|
Rates updated April 2, 2018.
Federal student loan fees are taken as a percentage of the total loan amount and deducted proportionally from each loan disbursement, meaning you’ll receive slightly less than the amount you borrow.
|Academic year||Undergraduate||Graduate||Parent PLUS, Grad PLUS|
Interest rates effective July 1 of each year. Loan fees effective October 1 of each year.
Current private student loan interest rates, updated monthly:
5.85% to 15.18%5
4.11% to 13.36%5
*includes Ascent Independent non-cosigned rates
4.25% APR to 8.00%
4.33% to 7.76%
Parent loans only
5.38% to 9.21%1
3.73% to 9.11%1
Visit Discover Student Loans
6.49% to 12.99%6
4.99% to 12.49%6
5.74% to 11.852
3.62% to 10.54%2
Current student loan refinancing rates, updated monthly:
How student loan interest rates work
Student loan interest rates work differently, depending on whether the loan is federal or private. For federal loans, every borrower taking out the same type of federal loan in a given year has the same interest rate. For private loans, borrowers with higher credit scores generally qualify for lower rates and borrowers with lower credit scores get higher rates.
Federal student loans:
- Congress sets interest rates yearly based on the 10-year Treasury note
- Most have fees charged as a percentage of the total loan amount
- Rates are fixed for the life of the loan
Private student loans:
- Interest rates are typically credit-based
- Most private lenders don’t charge origination fees
- Borrowers can choose either a fixed or variable interest rate
- Variable rates are subject to change monthly or quarterly
- Paying off interest before your grace period ends. When your student loans enter repayment, the unpaid interest will be capitalized, or added to your principal balance. Avoid costly interest capitalization by making monthly interest-only payments or paying a fixed amount — say, $25 — while you’re in school. Alternatively, pay off the interest during your grace period using graduation money or income from your first post-college job.
- Avoiding income-driven repayment, if possible. Federal income-driven repayment plans can keep cash-strapped borrowers out of default, but they also cost borrowers more interest in the long run. If you can afford to make federal loan payments on the standard, 10-year repayment plan, do it.
- Watching your overall financial health. Although you’ll save the most in student loan interest by paying off the loan as soon as possible, other financial goals are higher priority. Before paying extra on student debt, build an emergency fund, contribute to a 401(k) or IRA, and pay off high-interest debt such as credit cards.