--- title: Interest Rates on Federal Student Loans Just Ticked Down description: Interest rates on federal student loans just dropped slightly. Undergrad loans for the 2025-2026 year are 6.39%; PLUS loans at 8.94%. authors: - name: Kaitlin Mulhere role: Editor url: https://money.com/author/kaitlin-mulhere/ bio: Kaitlin Mulhere is an editor at Money.com, where she focuses on student debt. Her work guides readers from taking out their first student loan to navigating different repayment options. education: University of Florida at_money_since: 2015 articles: 217 covers: - Loans - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Mortgages - Personal Finance - Retirement - Shopping - Taxes social: - https://twitter.com/KMulhere - https://www.linkedin.com/in/kaitlin-mulhere-64503048/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Loans - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2025-07-03T14:43:38.000Z' modified: '2025-07-03T14:44:36.000Z' section: Loans tags: - News word_count: 529 canonical: https://money.com/federal-student-loan-interest-rates-2025/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo collage of a graduate student throwing a graduation cap into the air, standing on top of pointed down arrow](https://img.money.com/2025/05/College-Student-Loan-Interest-Down1.jpg) Interest rates on federal student loans just dipped slightly, though they remain high compared to what borrowers have paid over the past decade. Undergraduate student loans now carry an interest rate of 6.39%, down from 6.53% during the 2024-2025 academic year. Graduate direct loans have dropped to 7.94% from 8.08%. And PLUS loans for graduate students and parents of undergrads sit at 8.94%, compared with 9.08% last year. The rates, which were set based on the results of a Treasury auction in May, took effect on Tuesday. ## Get ahead of the 2026-2027 school year and apply for your Student Loan today ### Lenders like College Ave can put a world of possibility within your reach. Get the financial aid you need to cover tuition and materials. Click on your state to find out how. [View Rates](https://money.com/pr/k634bba49309?ap_referrer=%2Ffederal-student-loan-interest-rates-2025%2F) This is the first time since the summer of 2020 that interest rates on federal student loans have decreased — a ripple effect from the macroeconomic environment. Since last summer, the Federal Reserve has cut its benchmark lending rate three times in an effort to curb inflation. While borrowing costs on all kinds of products have decreased from their post-pandemic peaks, any further Fed [rate cuts are likely on hold for now](https://money.com/will-federal-reserve-hike-interest-rates/). Still, when looking at recent history, the financing charges students will pay during the 2025-2026 school year are quite expensive. From 2011 to 2022, for example, undergraduate borrowers never paid more than 5.05%, and in five of those years, they paid less than 4%. ## How interest rates on federal student loans are set Interest rates on federal student loans are based on the high yield of the 10-year Treasury [note](https://treasurydirect.gov/instit/annceresult/press/preanre/2025/R_20250506_2.pdf) at auction in May, plus a fixed percentage add-on that's dictated by law. The rates are fixed, meaning all borrowers who take out a loan between July 1, 2025, and June 30, 2026, will pay the rates that took effect this week for the entire loan repayment term (unless they [refinance their debt](https://money.com/how-to-refinance-student-loans/) into a private loan). Federal loans also carry a one-time origination fee, which increases their overall cost. The fees are currently 1.057% for undergraduate and graduate direct loans and 4.228% for PLUS loans. While rates are decreasing this year, because the change is so modest, the resulting savings will be minimal. For example, an undergraduate who borrows $7,000 in subsidized loans for the upcoming school year would pay about $2,490 in interest charges over a 10-year repayment period. That's roughly $60 less than a borrower would pay for the same loan and repayment term taken out during the 2024-2025 school year. [Student loan interest rates](https://money.com/student-loan-interest-rates/) on the private market currently range from 2.99% to 17.99%, though only the most creditworthy borrowers will qualify for the lowest rates, and almost all undergraduate borrowers will need a cosigner to get approved for a [private student loan](https://money.com/student-loans/). That's not the case for federal student loans; most have no credit requirement. The exception is PLUS loans, which do require a basic credit check to confirm the borrower doesn't have any recent delinquencies, defaults or bankruptcies. Even if you can qualify for lower rates on the private market, experts still recommend students use federal loans first, as they have better borrower protections and more flexible repayment options. ## Compare Student Loan companies to find the right fit ### Cover up to 100% of your college costs ![View Rates](https://s3.consumersadvocate.org/prd/image/image/24903/medium_b6089714-807b-4b5a-88f9-defb35d74711.png) Our Partner [View Rates](https://money.com/go/acf575fb864b?bidid=4113100362&pmeta=p129-c550-u24512&ptid=670611940&ptoken=a69e68f87e16d2b7095aa3264a3760ca) ### Apply online in minutes ![View Rates](https://s3.consumersadvocate.org/prd/image/image/29957/medium_1bf2c50c-d2fe-4492-bad2-f4bca2475954.webp) Our Partner [View Rates](https://money.com/go/ff3d686cbdf1?bidid=4113100361&pmeta=p129-c550-u24512&ptid=670611940&ptoken=029574058bc76833cdce795306449d79) ### No fees ![View Rates](https://s3.consumersadvocate.org/prd/image/image/38573/medium_5a7ddb75-a315-44cf-8526-1594057ec7d6.webp) Our Partner [View Rates](https://money.com/go/948a6a73cc46?bidid=4113100370&pmeta=p129-c550-u24512&ptid=670611940&ptoken=d4b30a90d96d2eb743a3468ab819999b) ### Provides customized private loan options for students ![View Rates](https://s3.consumersadvocate.org/prd/image/image/38575/medium_3b0e137f-8ec1-4f32-a340-85efa53e0aab.webp) Our Partner [View Rates](https://money.com/go/d1746637714d?bidid=4113100366&pmeta=p129-c550-u24512&ptid=670611940&ptoken=9ff5fe80f4094c489ba79955cb7b5288) ### Rates starting at 2.99% ![View Rates](https://s3.consumersadvocate.org/prd/image/image/38576/medium_d3a42618-1276-44ce-95cf-561a8f89efa8.webp) Our Partner [View Rates](https://money.com/go/4d34fa689e41?bidid=4113100373&pmeta=p129-c550-u24512&ptid=670611940&ptoken=18e816f30d9b456b1825289a85169f2a) ![](https://s3.consumersadvocate.org/prd/image/image/24903/medium_b6089714-807b-4b5a-88f9-defb35d74711.png) Reach new academic heights with College Ave [View Rates](https://money.com/pr/y61180a308af?ap_referrer=%2Ffederal-student-loan-interest-rates-2025%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/federal-student-loan-interest-rates-2025/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Loans", "item": "https://money.com/loans/" }, { "@type": "ListItem", "position": 3, "name": "Student Loans", "item": "https://money.com/student-loans-category/" }, { "@type": "ListItem", "position": 4, "name": "Interest Rates on Federal Student Loans Just Ticked Down" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/federal-student-loan-interest-rates-2025/#webpage", "url": "https://money.com/federal-student-loan-interest-rates-2025/", "name": "Interest Rates on Federal Student Loans Just Ticked Down", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-07-03T14:43:38.000Z", "mainEntity": { "@id": "https://money.com/federal-student-loan-interest-rates-2025/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/federal-student-loan-interest-rates-2025/#breadcrumb" }, "dateModified": "2025-07-03T14:44:36.000Z" }, { "@type": "NewsArticle", "headline": "Interest Rates on Federal Student Loans Just Ticked Down", "articleSection": "Loans", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/05/College-Student-Loan-Interest-Down1.jpg", "width": 1584, "height": 1056, "caption": "College-Student-Loan-Interest-Down" } ], "author": [ { "@type": "Person", "name": "Kaitlin Mulhere", "url": "https://money.com/author/kaitlin-mulhere/", "@id": "https://money.com/author/kaitlin-mulhere/#author", "description": "Kaitlin Mulhere is an editor at Money.com, where she focuses on student debt. 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