The Department of Education has announced that federal student loan interest rates for the 2026-2027 academic year will decrease to 4.5% for undergraduate borrowers, down from 5.5% the previous year. Graduate student rates will drop to 6.0%, while Parent PLUS loans fall to 7.0%.
The rate reduction reflects the decline in 10-year Treasury yields observed at the May 2026 auction. Financial aid experts say the lower rates could save the average undergraduate borrower approximately $1,200 over a standard 10-year repayment plan.
Prospective students are encouraged to submit their FAFSA applications early to maximize federal aid eligibility. The new rates apply to loans disbursed on or after July 1, 2026.
