2025-26 Federal Student Loan Interest Rates
Current interest rates, origination fees, and annual limits for Direct Subsidized, Unsubsidized, and PLUS loans for the 2025-26 academic year.
Key Numbers
Undergrad Direct
6.39%
Grad Unsub.
7.94%
Parent/Grad PLUS
8.94%
Rates Set
Annually July 1
Federal student loan interest rates are set annually by Congress, based on the 10-year Treasury note auction held each May. Rates are fixed for the life of the loan. The 2025-26 rates apply to loans first disbursed between July 1, 2025 and June 30, 2026 — all three loan types decreased by 0.14 percentage points, the first decrease since 2020-21.
2025-26 Rates & Fees
| Loan Type | 2025-26 Rate | 2024-25 Rate | Origination Fee |
|---|---|---|---|
| Direct Subsidized (Undergrad) | 6.39% | 6.53% | 1.057% |
| Direct Unsubsidized (Undergrad) | 6.39% | 6.53% | 1.057% |
| Direct Unsubsidized (Graduate) | 7.94% | 8.08% | 1.057% |
| Direct PLUS (Parent/Grad) | 8.94% | 9.08% | 4.228% |
How Rates Are Calculated
Each rate equals the 10-year Treasury note yield from the May auction plus a fixed statutory margin, subject to a statutory cap.
| Loan Type | Treasury Yield | + Margin | = Rate | Statutory Cap |
|---|---|---|---|---|
| Undergrad Stafford | 4.342% | + 2.05% | 6.39% | 8.25% |
| Graduate Stafford | 4.342% | + 3.60% | 7.94% | 9.50% |
| PLUS Loans | 4.342% | + 4.60% | 8.94% | 10.50% |
Fixed for life: Once a loan is disbursed, its rate never changes. Existing borrowers keep their original rate regardless of annual rate changes.
Borrowing Limits
Annual and aggregate borrowing limits depend on the student's year in school and dependency status. Independent students and graduate students can borrow more because they have no access to parent-based aid.
Undergraduate Annual Limits
| Year in School | Dependent Total | Independent Total | Max Subsidized |
|---|---|---|---|
| Freshman (0–29 credits) | $5,500 | $9,500 | $3,500 |
| Sophomore (30–59 credits) | $6,500 | $10,500 | $4,500 |
| Junior & Beyond (60+ credits) | $7,500 | $12,500 | $5,500 |
| Aggregate Limit | $31,000 | $57,500 | $23,000 |
Graduate & PLUS Limits
| Loan Type | Annual Limit | Aggregate Limit | Notes |
|---|---|---|---|
| Direct Unsubsidized (Grad) | $20,500 | $138,500 | Includes undergrad borrowing |
| Graduate PLUS | COA − other aid | No cap | Credit check required |
| Parent PLUS | COA − other aid | No cap | Credit check required |
PLUS origination impact: The 4.228% fee on a $25,000 PLUS loan means you receive $23,943 but repay $25,000 plus interest. Factor this into your true cost of borrowing.
Historical Rates
Federal student loan rates have ranged from a historic low of 2.75% (2020-21) to 6.53% (2024-25) over the past decade. The 10-year average for undergraduate rates is approximately 4.5%.
| Academic Year | Undergrad | Graduate | PLUS |
|---|---|---|---|
| 2025-26 | 6.39% | 7.94% | 8.94% |
| 2024-25 (Recent High) | 6.53% | 8.08% | 9.08% |
| 2023-24 | 5.50% | 7.05% | 8.05% |
| 2022-23 | 4.99% | 6.54% | 7.54% |
| 2021-22 | 3.73% | 5.28% | 6.28% |
| 2020-21 (Historic Low) | 2.75% | 4.30% | 5.30% |
| 2019-20 | 4.53% | 6.08% | 7.08% |
| 2018-19 | 5.05% | 6.60% | 7.60% |
| 2017-18 | 4.45% | 6.00% | 7.00% |
| 2016-17 | 3.76% | 5.31% | 6.31% |
| 2015-16 | 4.29% | 5.84% | 6.84% |
COVID-19 payment pause (March 2020 – August 2023): Interest on existing federal loans was set to 0% and payments were suspended. New loans disbursed during this period still accrued interest at the annual rate.
Federal vs. Private Loans
Private loans may offer lower rates for borrowers with excellent credit but lack federal borrower protections. Most financial aid offices advise exhausting federal loan options first.
| Feature | Federal Loans | Private Loans |
|---|---|---|
| Interest Rate (2025) | 6.39% – 8.94% (fixed) | ~3% – 18% (varies by lender) |
| Rate Type | Fixed only | Fixed or variable |
| Credit Check | No (except PLUS) | Yes — cosigner typically required |
| Income-Driven Repayment | ✓ Available | ✗ Not available |
| PSLF Eligible | ✓ Yes | ✗ No |
| Deferment/Forbearance | ✓ Flexible options | ⚠ Limited |
| Origination Fee | 1.057% – 4.228% | Varies (often 0%) |
| Borrowing Cap | Set by year/level | Up to cost of attendance |
Federal Advantages
Income-driven repayment, PSLF eligibility, generous deferment and forbearance options, no credit check for most loans, and fixed rates for the life of the loan.
When Private May Apply
Excellent credit (750+) may qualify for rates below federal. Useful when federal limits are exhausted, or for borrowers not pursuing forgiveness who plan to repay quickly in a high-earning career.
Variable rate risk: An introductory variable rate of 4% could rise to 10%+ over a 10-year term if interest rates increase. Fixed rates provide payment predictability.
Sources
- 1.Federal Student Aid — Interest Rates and Fees for Federal Student Loans
- 2.Federal Student Aid — Subsidized and Unsubsidized Loans
- 3.Federal Student Aid — PLUS Loans
- 4.U.S. Department of Education — Federal Student Loan Programs: Annual Limits
- 5.Congressional Research Service — Federal Student Loan Interest Rate Setting
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.