Federal student loan interest rates for the 2026-2027 academic year will be set based on the May 2026 Treasury auction. Here's what borrowers can expect.
Projected Rates
Based on current Treasury yields, experts project:
- Undergraduate Direct Loans: 5.50% (down from 5.75% in 2025-2026)
- Graduate Direct Loans: 7.05% (down from 7.30%)
- Parent PLUS Loans: 8.05% (down from 8.30%)
Fixed vs Variable?
All federal student loans have fixed rates — they don't change after disbursement. The rate you get when you borrow is locked for the life of that specific loan.
How to Minimize Interest Cost
Borrow only what you need. Pay interest while in school if possible — even $25/month helps. Choose the shortest repayment term you can afford after graduation. Consider making payments during the grace period.
Private loans may offer lower rates for borrowers with excellent credit, but the trade-off is losing federal protections and forgiveness options.
