Student loan interest rates vary depending on the type of loan you choose. They also determine how much money you’ll end up paying back over the life of the loan.
If you’re looking to borrow money for school or refinance1 your existing student loans, you should know what the current student loan interest rates are and how they may impact your ability to afford the payments.
Current student loan interest rates
Taking out a new student loan? Here are the current student loan interest rates:
|Rate Category||Fixed||Fixed or variable|
|Graduate or Professional||6.54%||0.94%*-11.98%|
|Parent and Graduate or Professional Students||7.54%||0.94%*-11.98%|
*Our lowest rates are only available for our most credit-qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
2022-2023 New federal student loan interest rates
The interest rates for federal student loans for the coming academic year are set based on the May 10-year Treasury notes auction. That auction took place on May 11, and we now know the interest rates for student loans in the 2022-2023 academic year. All interest rates shown in the “Federal” column of the chart above are for loans first disbursed on or after July 1, 2022, and through June 30, 2023. These are fixed rates that will not change for the life of the loan.
Federal student loan interest rates work differently, depending on the type of borrower:
- Undergraduate student loan borrowers may benefit from subsidized loans, since the government pays the interest while you’re enrolled in school. To qualify, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) to prove you’re eligible for financial assistance. With unsubsidized loans, you don’t need proof you qualify for financial aid, but you’ll be required to repay interest that accrues while you’re in school.
- Graduate students may opt for unsubsidized loans, which have a lower interest rate than the Grad PLUS loan. Also, you must have a solid credit history to qualify for a Grad PLUS loan. With both loans, you have to pay interest while you’re in school.
- Parents have one option: The Parent PLUS loan. To qualify, you have to be the biological or adoptive parent of a dependent undergraduate student, and you must have good credit. Loan payments start upon disbursement, unless you file for deferment. You’ll still be required to pay accrued interest during deferment.
2022 Private student loan interest rates2
Generally speaking, there are two kinds of student loans: federal and private. Federal student loans such as Stafford loans and Pell Grants are made through the U.S. Department of Education, whereas private student loans are made by private lenders, such as banks, credit unions, or online lenders.
When borrowing money for college, it typically makes sense to apply for federal student loans first3. Since they’re backed by the federal government, these loans usually offer better terms, lower interest rates and flexible repayment plans. However, federal loans may not cover the entire cost of your education for the school year, so you may need to apply for private student loans to fill in any gaps.
Private loans often have higher interest rates than federal loans. Student loan interest rates are worth paying attention to because they can make a huge difference in how much you’ll end up paying back over the life of the loan.
Below are current student loan interest rates from five private lenders:
|Lender||Fixed APR from||Variable APR from|
|Sallie Mae||Undergraduate: 3.75%
(includes 0.25% Auto Pay discount)
(includes 0.25% Auto Pay discount)
(includes 0.25% Auto Pay discount)
(includes 0.25% Auto Pay discount)
Information in this chart is sourced from:
2022 Student loan refinancing interest rates5
Refinancing your student loans means you’ll take out a new loan with a new lender. The new lender will pay off your old loan, and you’ll make payments on the new one. Why refinance? You could lower your monthly payment, reduce your current interest rate, or both.
If you have more than one student loan, you have the option to refinance one, a few, or all of them. You could refinance just your private loans, for example. What’s more, combining multiple loan payments into one can help simplify your finances.
Lenders typically offer their lowest interest rates to borrowers with stable incomes and the best credit scores. If your credit needs improving, you may decide to wait to refinance, or see if you can get a co-signer. The catch is, that person will be responsible for making your student loan payments if you’re unable to, and the loan will appear on their credit report.
Here are the current interest rates for a student loan refinance from five private online lenders:
|Lender||Fixed APR from||Variable APR from|
|Earnest||2.99%4 (including 0.25% Auto Pay discount)||1.74%4 (including 0.25% Auto Pay discount)|
|NaviRefi by Navient||2.99%||1.74%|
|Education Loan Finance||3.39%||1.86%|
Information in this chart is sourced from:
How are student loan interest rates set?
Federal student loan interest rates and private student loan interest rates tend to follow prevailing trends in the economy and markets. As such, interest rates of loan types tend to move in tandem with each other. When federal student loan interest rates go down, private student loan interest rates are likely to follow.
Federal student loan interest rates
Congress sets student loan interest rates in the spring. The new rates are determined based on the 10-year Treasury notes auction in May, and apply to loans disbursed between July 1 and June 30 of the next year.
Federal student loan interest rates are fixed, which means they stay the same for the life of the loan. In addition, your loan’s interest rate isn’t impacted by your credit or financial history.
The interest rates work differently for subsidized and unsubsized federal student loans. If your loan is subsidized, the government pays the interest while you’re enrolled in school at least half time, during your grace period, and while your loan is in deferment.
If you have an unsubsidized federal student loan, that means the interest charges started accumulating when you received the funds. If you put off paying your loans, the accrued interest gets added to the principal balance when the repayment period begins.
Due to the ongoing effects of the coronavirus pandemic, federal student loan protections are in place until Aug. 31, 2022. That means payments are currently in forbearance, and interest rates are set to zero. As of this writing, President Biden is still exploring broad student loan forgiveness measures6.
Private Student Loan interest rates
Private student loans are issued by individual lenders, which means some lenders may have higher rates than others. Private student loan interest rates may be fixed or variable. If you choose the variable-rate option, your interest rate may go up or down over the life of the loan.
Private student loan interest rates are often determined by the prime or the Secured Overnight Financial Rate (SOFR) rate. However, that’s only part of the equation. Student loan lenders also use your credit score, income, and overall financial health to determine what your interest rate will be. Lenders will typically reward student loan borrowers with higher credit scores and a stable financial history with lower interest rates.
When lenders check your credit, it’s usually considered a “hard inquiry,” which can lower your credit score a few points. However, you can usually preview your rates and terms with only a soft credit check, which doesn’t negatively impact your credit score.
How to calculate student loan interest
Student loan interest accrues daily. So how do you calculate how much interest you’ll pay each month?
Suppose you borrow $20,000 at an annual interest rate of 8%. If you’re on a 10-year standard student loan repayment plan, your monthly payment would be about $2427.
Here’s how you figure out your monthly interest:
Step 1: Figure out your daily interest rate. Divide your annual student loan interest rate by the number of days in the year.
.08/365 = 0.00022 or .022%
Step 2: Calculate the daily interest accrued on your loan by multiplying your outstanding loan balance by the daily interest rate.
$20,000 x 0.00022 = $4.40
Step 3: Calculate your monthly interest payment. Multiply the daily interest from Step 2 by the number of days in the month.
$4.20 x 30 = $132
If your student loan is in a normal repayment plan, interest accrues every day, but doesn’t compound daily. That means you’ll pay the same amount of interest each day of the repayment period, but you typically won’t pay additional interest on the interest.
How to lower your student loan interest rate
If your credit score and finances are healthy, you may be able to lower your student loan interest rate. Here are a few options:
1. Refinance your private student loans
The goal of refinancing is to trade your existing loan for one with a lower interest rate. When you refinance, your new lender will pay off your old loan, and you’ll make payments on the new one going forward.
The better your credit and financial situation, the more likely you are to qualify for a loan with a lower interest rate.
To qualify for a refinance, you’ll need a credit score in the good to excellent range (or a co-signer with good credit), and a steady income that allows you to afford your student loan payments along with other bills, like rent, groceries, and credit cards without feeling pinched.
Another perk of a lower-rate loan is they usually come with shorter repayment terms. The faster you can repay your student loan, the less interest you’ll pay over time, which could save you thousands of dollars over the life of the loan.
2. Take advantage of discounts
Signing up for autopay is another way to lower your student loan interest rate. With autopay, federal and some private lenders offer a discount when you sign up to have your monthly payments automatically withdrawn from your bank account. Earnest offers a 0.25% discount4 when you sign up for autopay. Check with your lender to see if they offer an autopay discount.
Autopay also safeguards against accidental missed payments. Just make sure you have enough in your bank account so you don’t get hit with overdraft or low balance fees.
Some lenders offer a loyalty discount, too. For example, if you have an eligible account, such as a personal loan or savings account with the same lender that services your student loans, you may qualify for a small loyalty discount on your interest rate.
3. Negotiate a lower interest rate
It may be worthwhile to comparison shop for a more competitive student loan rate, especially when rates are low. If you don’t want to switch lenders, consider negotiating with your existing loan servicer for a lower rate. They may not match it, but you won’t know if you don’t ask.
4. Secure a cosigner
Adding a cosigner with good credit and stable income may also help lower your interest rate. However, it’s risky because the co-signer becomes responsible for your loan, and both your credit histories could be negatively impacted if you aren’t able to make the payments.
What is the difference between APR and student loan interest?
The interest rate is basically the cost of borrowing money from a particular lender. Each month the accrued interest will be added to the principal due in your monthly payment until you pay the principal back in full.
The APR, on the other hand, includes any origination fee or other costs that may be added when signing your loan agreement in addition to the interest rate. Therefore, APR is a more accurate indicator of how much you’ll pay on top of principal. With the Truth in Lending Act, lenders are required to disclose the APR before you sign a loan or take on a credit obligation.
Fixed interest rate vs variable interest rate
When applying for a private student loan or refinancing, you typically have a choice between fixed and variable interest rates. The interest rates tend to be higher with a fixed-rate loan, but they stay the same over the life of the loan. Federal student loans always have fixed interest rates, and the rate is the same for all borrowers, regardless of their finances or credit history.
Private student lenders offer both fixed and variable-rate loans. While variable-rate loans often start out with lower interest rates, the risk is that those rates can fluctuate, and may increase over time depending on the rate benchmark the lender uses (often the prime or SOFR rate).
You may opt for a fixed-rate loan if you want a steady monthly payment and interest rate, and if you’re more comfortable knowing the exact loan amount you’ll end up paying back. A variable-rate loan may be appealing if you’re looking for a lower interest rate or to save money, or you plan to make extra payments to knock down the principal and pay off your loan faster.
See how much you could save with Earnest
If you’re ready to apply for student loan or refinance current ones, shop multiple lenders to get the best student loan interest rates. Earnest offers some of the lowest rates around, with flexible terms and features to fit your repayment timeline and budget.
To see how much money you could save, check your rate with Earnest today. It takes just two minutes, and it won’t negatively impact your credit score.
Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.
1 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for total cost of your refinanced loan.
2 Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.
3 Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grant and work-study opportunities. 2) Next, fill out a FAFSA® form to apply for federal student loans. Federal student loans do not require a credit check or cosigner, and offer various protections if you’re struggling with payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.ed.gov.
4 You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
5 Loan Eligibility criteria: Your debt is from paying for education at a Title IV accredited school. The debt is from your education or your child’s. The debt you’re refinancing is for a completed degree or one that will be completed at the end of this semester. You are currently the primary borrower on the student loans you would like to refinance, and you will remain the primary borrower after refinancing. You must reside in the District of Columbia or one of the 48 states Earnest Operations LLC is authorized to lend in (all but Kentucky and Nevada). This is strictly a student loan refinance product. There is no opportunity to borrow more than your outstanding qualifying student loan amount. You must be the age of majority in your state or older at the time you apply, as well as be a United States citizen or Permanent Resident Alien without conditions. Refinancing is subject to credit qualifications. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX.
You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan.
6 *AN UPDATED NOTICE FOR BORROWERS WITH FEDERAL STUDENT LOANS: We want federal student loan borrowers to explore all their options before applying to refinance their federal student loans. Refinancing a federal student loan with a private lender means you will no longer have access to any benefits of your federal loans, including the temporary 0% interest rate and suspension of payments effective through December 31, 2022 and the debt cancellation on federally held loans announced by the Department of Education on August 24, 2022 (which includes up to $10,00 in debt cancellation for qualifying federal student loan borrowers – the amount is increased to up to $20,000 for qualifying Pell Grant recipients), the Public Service Loan Forgiveness Limited Waiver Option available through October 31, 2022, or any other current or future measures implemented for federally held loans. Please carefully review your current and potential benefits with your federal loan servicer, including debt cancellation and loan forgiveness options such as Public Service Loan Forgiveness and Income-Driven Repayment, before refinancing. To learn more about debt cancellation, visit https://studentaid.gov/debt-relief-announcement/.
7 Earnest’s Loan Cost Examples: These examples provide estimates based on principal and Interest payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $21,290.40. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $22,827.79.
These examples provide estimates based on interest only payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $26,173.03. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $28,186.67. Your actual repayment terms may vary. Other repayment options are available.
These examples provide estimates based on fixed $25 payments while in school. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $30,584.74. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $33,915.55. Your actual repayment terms may vary. Other repayment options are available.
These examples provide estimates based on deferred payments. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 11.69% APR would result in a total estimated payment amount of $31,462.16. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $XX) and a 13.03% APR would result in a total estimated payment amount of $34,874.28. Your actual repayment terms may vary. Other repayment options are available. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
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