What interest rate you pay depends on the loan type and when you borrowed
Student loan interest rates are not one number. Federal loans have rates set by Congress that change each year for new borrowers. Private loans have rates that vary by lender and your credit history. A federal Direct Subsidized Loan issued in 2024 carries a different rate than one issued in 2023, and both differ from what a private lender charges you based on your credit score and income.
The rate you pay is locked in when you take out the loan and does not change over the life of that loan — whether it is federal or private. This means if you borrowed at 5% five years ago, you still pay 5% today, even if current rates are higher or lower.
Key Takeaways
- Federal student loan rates are set by Congress and vary by loan type; Direct Unsubsidized Loans and Direct PLUS Loans have different rates than Direct Subsidized Loans.
- Your interest rate is fixed when you borrow and does not change, even if federal rates or market conditions shift later.
- Private student loan rates depend on your credit score, income, and the lender's policies, and can be fixed or variable.
- You can find your exact rate on your loan documents, your loan servicer's website, or by contacting your servicer directly.
Federal student loan rates for loans issued in 2024
Congress sets federal rates each year. For loans issued between July 1, 2024, and June 30, 2025, the rates are: Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduates are 6.53%; Direct Unsubsidized Loans for graduate students are 8.05%; and Direct PLUS Loans (for parents and graduate students) are 9.29%.
These rates apply only to new loans taken out during that period. If you borrowed a federal loan in 2023, 2022, or earlier, your rate is whatever it was when you borrowed. Rates have changed year to year — for example, the 2023 rates were different, and the 2022 rates were different again — so older loans may carry lower or higher rates than current borrowers.
The rate you see includes an origination fee, which is a percentage the Department of Education deducts from your loan before you receive it. For Direct Loans, this fee is currently 1.13% of the loan amount.
How private student loan rates work
Private lenders set their own rates based on your credit score, income, employment history, and whether you have a cosigner. A borrower with excellent credit might receive a rate of 4% to 6%, while a borrower with fair credit might be offered 8% to 12% or higher. The same lender will quote different rates to different people on the same day.
Private loan rates can be fixed (the rate stays the same for the life of the loan) or variable (the rate changes based on market conditions, usually annually). Variable rates often start lower but can increase significantly over time. Always check whether a private loan offer is fixed or variable before you accept it.
Private lenders do not publish a single rate the way federal loans do. You must contact lenders directly or use their online tools to see what rate you would receive. This requires a credit check, which may temporarily lower your credit score by a few points.
Where to find your current loan rate
For federal loans, log into studentaid.gov and view your loan details under "My Aid." This shows every federal loan you have, the type, the balance, and the interest rate. You can also contact your loan servicer — the company that collects your payments — by phone or through their website.
For private loans, check your loan documents or log into your lender's website. If you cannot find it, call the lender's customer service line. Have your loan account number ready.
If you are still in school and have not yet started repayment, your loan documents from the school or lender will show the rate. Federal loans also appear on studentaid.gov before repayment begins.
Why federal and private rates differ
Federal loans have rates set by law, which means they are the same for all borrowers in a given year regardless of credit score or income. This protects borrowers with lower credit scores from being charged much higher rates. The trade-off is that federal rates are often higher than what the best-credit borrowers could get from private lenders.
Private lenders use credit-based pricing, meaning they charge different rates to different people to reflect their perceived risk. A borrower with a 750 credit score and stable income is less risky to a lender than a borrower with a 600 credit score, so the first borrower gets a lower rate. Private lenders also have fewer consumer protections built into their loans — for example, they are not required to offer income-driven repayment plans or loan forgiveness programs.
What happens to your rate if you refinance
If you refinance a student loan, you are taking out a new loan to pay off the old one. The new loan has a new interest rate, which is locked in at the time you refinance. You cannot refinance federal loans into federal loans — refinancing always means switching to a private lender. Once you refinance a federal loan into a private loan, you lose access to federal protections like income-driven repayment and Public Service Loan Forgiveness.
Refinancing makes sense only if the new rate is lower than your current rate and you do not need federal protections. If you refinance, you also restart the repayment clock — a 10-year loan becomes 10 years from the refinance date, not from the original loan date.
How interest accrues and affects what you owe
Interest accrues (builds up) daily on most student loans. The amount owed each day is calculated as: loan balance × interest rate ÷ 365. On a $30,000 loan at 6% interest, you accrue about $4.93 per day. If you do not make a payment, that accrued interest is added to your balance, and future interest is calculated on the higher amount.
On federal subsidized loans, the government pays the interest while you are in school and during certain deferment periods. On unsubsidized loans and all private loans, interest accrues from day one, even if you are not making payments yet. This is why borrowers often see their loan balance grow between graduation and the start of repayment.
Frequently Asked Questions
Can I change my interest rate after I borrow?
No. Your rate is locked in when you take out the loan. You cannot change it unless you refinance, which means taking out a new loan with a new rate. Refinancing is only available through private lenders, and you lose federal protections when you do.
Why is my private loan rate so much higher than federal rates?
Private lenders base rates on your credit score and income. If your credit is fair or limited, lenders charge higher rates to offset their risk. Federal rates are the same for everyone regardless of credit, which is why federal loans are often cheaper for borrowers with lower credit scores.
Do I pay interest while I'm still in school?
On federal subsidized loans, no — the government covers it. On unsubsidized federal loans and all private loans, yes. Interest accrues daily even if you are not making payments. Many borrowers pay interest while in school to avoid a larger balance at graduation.
What's the difference between fixed and variable rates?
Fixed rates stay the same for the entire loan. Variable rates change, usually once per year, based on market conditions. Variable rates often start lower but can increase significantly. Federal loans are always fixed; private loans can be either.
Where can I see the interest rate on my federal loans?
Log into studentaid.gov and view your loan details, or contact your loan servicer. Your servicer's name appears on your billing statements and on studentaid.gov. You can also call the Federal Student Aid Information Center at 1-800-4-FED-AID.