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
For 2025–26, federal student loan interest rates are 6.39% for undergraduate borrowers, 7.94% for graduate students, and 8.94% for PLUS loans — the first decrease since 2020-21, down 0.14 percentage points across all loan types. Rates are fixed for the life of the loan and apply to loans first disbursed between July 1, 2025 and June 30, 2026.
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% |
Fixed for life: Once a loan is disbursed, its rate never changes. Existing borrowers keep their original rate regardless of annual rate changes. Autopay discount: All federal servicers reduce your rate by 0.25 percentage points if you enroll in automatic debit payments — bringing the undergraduate rate to 6.14% for 2025-26.
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. Congress sets these margins in law — they do not change annually.
| 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% |
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. The limits below apply to loans disbursed through June 30, 2026. Graduate PLUS and Parent PLUS limits change materially on July 1, 2026 — see the next section.
Undergraduate Annual Limits
Unchanged by the 2025 reconciliation law — these limits apply to all undergraduate borrowers.
| 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 (through June 30, 2026)
| Loan Type | Annual Limit | Aggregate Limit | Notes |
|---|---|---|---|
| Direct Unsubsidized (Grad) | $20,500 | $138,500 | Includes undergrad borrowing |
| Graduate PLUS | COA − other aid | No cap | Eliminated July 1, 2026 ↓ |
| Parent PLUS | COA − other aid | No cap | New caps July 1, 2026 ↓ |
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.
What Changes July 1, 2026
The One Big Beautiful Bill Act (OBBBA), signed in 2025, restructures federal student loan borrowing and repayment for new borrowers starting July 1, 2026. Interest rate calculation is unchanged — the Treasury yield formula still applies. Borrowers enrolled before June 30, 2026 are grandfathered under current limits for three years.
Graduate PLUS loans are eliminated effective July 1, 2026 for new borrowers. Graduate and professional students will need to rely on Direct Unsubsidized loans (subject to new annual and lifetime caps) and, potentially, private loans to cover remaining costs.
New Limits for Loans Disbursed July 1, 2026+
| Loan Type | Prior Annual Limit | New Annual Limit | New Lifetime Limit |
|---|---|---|---|
| Undergrad (Dependent) | $5,500–$7,500 | Unchanged | $31,000 |
| Undergrad (Independent) | $9,500–$12,500 | Unchanged | $57,500 |
| Graduate (Unsubsidized) | $20,500 | $20,500 | $100,000 |
| Professional / Medical | COA via Grad PLUS | $50,000 | $200,000 |
| Graduate PLUS | COA − other aid | Eliminated | — |
| Parent PLUS | COA − other aid | $20,000/student | $65,000/student |
A new overall lifetime borrowing cap of $257,500 applies across all federal loan types for a single borrower (excluding Parent PLUS).
Repayment Plan Changes for New Borrowers
| Plan | Status after July 1, 2026 | Who is affected |
|---|---|---|
| Standard Repayment (modified) | ✓ Available | All borrowers; term length varies by balance |
| Repayment Assistance Plan (RAP) | ✓ New plan — replaces IDR | New borrowers (loans after July 1, 2026) |
| Income-Based Repayment (IBR) | ✓ Limited — existing borrowers only | Must transition by July 1, 2028 |
| SAVE / PAYE / ICR plans | ✗ Eliminated | Existing enrollees must switch by July 1, 2028 |
| Parent PLUS — IDR & PSLF | ✗ No longer available | New Parent PLUS loans after July 1, 2026 only |
Grandfather rule: Students who are enrolled before June 30, 2026 and already borrowing from an affected program (Grad PLUS, Parent PLUS) may continue under current limits for up to three additional years of remaining expected enrollment. Interest rates on all loans — new and existing — continue to be set by the Treasury yield formula; the OBBBA does not alter how rates are calculated.
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.Federal Student Aid — Federal Student Loan Programs: Annual Limits
- 5.Congressional Research Service — Federal Student Loan Interest Rate Setting
- 6.TICAS — Federal Student Loan Amounts and Terms for Loans Issued in 2025-26
- 7.TICAS — Provisions Affecting Higher Education in the Reconciliation Law (OBBBA)
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.