Student Loan Interest Rates in 2025: What Borrowers Need to Know
Federal student loan interest rates for 2025–26, how rates are set each May, origination fees, daily interest math, private loan factors, and smart ways to lower your cost—plus a quick comparison to 2024–25 and a borrower checklist.
Student Loan Interest Rates in 2025: What Borrowers Need to Know
If you’ll borrow this year, here’s the bottom line on 2025 student loan interest rates. Federal rates for loans first disbursed between July 1, 2025 and June 30, 2026 are set, fixed for the life of the loan, and slightly lower than last year. Below you’ll find the exact 2025–26 federal student loan interest rates, how they’re calculated, the fees that affect your true cost, and simple moves to pay less interest overall.
2025–26 Federal Student Loan Interest Rates (Fixed)
Rates for loans first disbursed July 1, 2025–June 30, 2026
| Loan Type | Who Borrows | 2025–26 Fixed Rate | 2024–25 (for comparison) |
|---|---|---|---|
| Direct Subsidized/Unsubsidized | Undergraduates | 6.39% | 6.53% |
| Direct Unsubsidized | Graduate/Professional | 7.94% | 8.08% |
| Direct PLUS | Parents & Grad/Professional | 8.94% | 9.08% |
Rates above are fixed for the life of each new loan. They apply only to loans first disbursed in 2025–26; older loans keep their original rate. :contentReference[oaicite:0]{index=0}
How 2025 Rates Were Set (and Why They Move Each Year)
Formula you can trust
- Each May, the government takes the 10-year Treasury note auction and adds fixed margins: +2.05% (undergrad), +3.60% (grad unsubsidized), +4.60% (PLUS). The resulting rates are capped at 8.25%, 9.50%, and 10.50% respectively. :contentReference[oaicite:1]{index=1}
- For 2025–26, the May 2025 10-year Treasury auction came in around 4.342%, producing the fixed rates listed above. :contentReference[oaicite:2]{index=2}
Origination Fees & Your “All-in” Cost
Fees still apply on new federal loans
- Direct Subsidized/Unsubsidized: 1.057% fee (deducted from each disbursement).
- Direct PLUS: 4.228% fee.
These fee percentages remain in effect for disbursements through the 2025–26 year per sequester guidance and university financial aid notices. Remember: fees reduce what hits your account, but you repay the full amount borrowed. :contentReference[oaicite:3]{index=3}
How Federal Loan Interest Actually Accrues
Daily interest math (simple, not compounding)
Federal Direct Loans use daily simple interest: daily interest = (principal × rate) ÷ 365. Unsubsidized and PLUS loans accrue while you’re in school; subsidized loans don’t accrue during at least half-time enrollment and grace. :contentReference[oaicite:4]{index=4}
- Auto pay typically earns a 0.25% rate reduction—easy long-term savings. Enroll via your servicer. :contentReference[oaicite:5]{index=5}
Private Student Loan Rates in 2025 (What to Know)
Why private rates vary
- Private lenders price loans on credit, income, school/program, and market benchmarks (often SOFR). Fixed and variable options exist; variable rates can change over time.
- Compare APRs, not just “headline” rates, and check for autopay discounts and cosigner release timelines.
If a funding gap remains after grants and scholarships, compare borrowing carefully and treat private student loans as a last step. (Federal loans keep income-driven plans and forgiveness paths.)
Quick Moves to Lower Interest Cost in 2025
Action checklist
- Borrow federal first. Use unsubsidized only as needed; PLUS last.
- Turn on auto pay for the 0.25% rate cut; keep a buffer to avoid returned payments. :contentReference[oaicite:6]{index=6}
- Pay interest while in school on unsubsidized/PLUS to prevent balance growth.
- Aim extra payments at principal (no prepayment penalties).
- Refinance cautiously: once you refinance federal loans privately, you permanently lose federal protections (IDR/forgiveness).
FAQs: Student Loan Interest Rates 2025
Do my rates change after I take the loan?
No. Federal Direct Loans are fixed for the life of the loan. New borrowers each year get new fixed rates. :contentReference[oaicite:7]{index=7}
What are the legal caps?
Maximum fixed rates are 8.25% (undergrad), 9.50% (grad unsubsidized), and 10.50% (PLUS). :contentReference[oaicite:8]{index=8}
Why did rates dip versus 2024–25?
Rates track the May 10-year Treasury auction each year, plus fixed add-ons. The 2025 auction cleared slightly lower than 2024, so 2025–26 rates ticked down. :contentReference[oaicite:9]{index=9}
Next Steps
Lock in a lower net price before borrowing
- Apply monthly for outside awards to reduce how much you need to borrow: start with our Scholarships directory.
- Confirm your aid offer and costs; if a gap remains, compare federal vs private borrowing carefully.
Written by TCM Staff
