Best Interest Rates Student Loans

Last Updated on January 19, 2023

Good news! The best interest rates student loans are here.

If you’re a recent graduate, a parent helping your child pay for college, or a veteran, you know how expensive it is to pay for higher education. That’s why we’re offering the best interest rates student loans on the market. We want to make sure everyone has access to higher education in this country—and that means giving our customers the best rates possible.

We’ve been doing this for years now and have helped thousands of people get the funds they need for school. We know what it takes to make sure students have access to higher education and that every dollar goes into their education instead of paying off loans that will take years and years to pay off.

Best Interest Rates Student Loans

Student Loans for International Students | eduPASS

The Bankrate guide to choosing the best student loans

Why trust Bankrate?

Bankrate wants to empower readers to make smart financial decisions. We’ve been comparing and surveying financial institutions for more than 40 years to help you find the right products for your situation. Our award-winning editorial team follows strict guidelines to ensure the content is not influenced by advertisers. Additionally, our content is thoroughly reported and vigorously edited to ensure accuracy.

When shopping for a student loan, look for a competitive interest rate, flexible repayment terms that meet your needs, generous hardship options and minimal fees. Loan details presented here are current as of March 24, 2022. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability. To learn more, read our methodology section above.

How do I choose a student loan? 

When choosing a student loan, start by looking at federal loans. More than 90 percent of outstanding student loans are federal, and for good reason: With low rates and many options for payment assistance and loan forgiveness, they’re the best choice for most borrowers.

If you do look for private loans, the best way to choose a loan is to compare offers from a few lenders — a good rule of thumb is to get prequalified with at least three. Once you have offers in hand, you should choose the lender that gives you the lowest interest rate, the best repayment terms and the fewest fees.

Also consider whether the lender offers unique features. If a lender offers a long deferment period while you’re doing a medical residency, for instance, it may be worth it to choose that lender over one with a slightly lower interest rate.

Federal vs. private student loans

Federal student loans are offered by the U.S. Department of Education, while private student loans are offered by banks, credit unions and private lenders. It’s almost always best to start your search with federal student loans, though private student loans also offer some unique perks.

The biggest difference between federal and private loans is in the rates and eligibility requirements. Private lenders base your rates on your credit score, with a poor credit score leading to higher rates. Federal student loans, on the other hand, offer every borrower the same rate for each type of loan. The average interest rate on a private student loan can range from around 1 percent to 13 percent, while federal loans charge 3.73 percent, 5.28 percent or 6.28 percent, depending on the loan type.

Some federal loans do have borrowing limits, so borrowers will often turn to private lenders to finance their remaining academic costs. However, while private loans can often finance up to the total cost of attendance, they don’t offer as many ways to customize your repayment plan.

FEDERAL STUDENT LOANSPRIVATE STUDENT LOANS
Interest rates3.73% to 6.28%2.99% to 13.65% fixed, 0.94% to 11.98% variable
Fees1.057% to 4.228% origination feeVaries by lender
Borrowing limits$31,000 total for dependent undergraduates, $57,500 total for independent undergraduates, 100% total cost of attendance for graduates100% total cost of attendance with many lenders
BenefitsIncome-driven repayment plans, robust deferment and forbearance, no minimum credit scoreLow interest rates for good-credit borrowers, often zero fees, lender-specific perks
DrawbacksPotentially higher interest rates than private loans offer for borrowers with good credit, loan amount caps for undergraduate borrowersCredit check required, high rate caps, fewer borrower protections

How does student loan interest work?

When you apply for a student loan, you’ll be offered an interest rate. This interest rate is an extra percentage of your loan amount that you’ll have to pay each month.

With federal loans, this rate is the same for all borrowers and is determined by the federal government each year. With private loans, this rate is determined by your credit score, income and more. The most affordable private student loans go to students in good financial health with high credit scores.

Learn more: How Fed rate changes impact student loans

Prospective borrowers can usually choose between a fixed and a variable interest rate. Fixed interest rates remain the same over the life of the loan, while variable rates change based on market trends. Federal student loans are always fixed, while private student loans can be either fixed or variable.

Learn more: Fixed vs. variable student loan rates

How is student loan interest calculated?

While browsing interest rates, you can calculate your student loan interest to estimate how much you will pay each month. Here’s how to do it:

  1. Find your daily interest rate: Divide your annual interest rate by the number of days in a year (365).
  2. Determine your daily interest accrual charge: Multiply your daily interest rate by your principal balance.
  3. Calculate your monthly payment: Multiply your daily interest by the number of days in your billing cycle.

If you have $10,000 in student loans and a 6 percent interest rate, with a 30-day billing cycle, you would pay a little over $49 in interest monthly.

You can also calculate how much interest you’ll pay over the life of your student loan by using a student loan calculator.

Learn more: How to calculate student loan interest

What are current student loan interest rates?

Current interest rates on student loans vary based on where the loan originates, the type of interest rate and the creditworthiness of the borrower.

LOAN TYPEFIXED APRVARIABLE APR
Refinance Student Loan Rates1.99% to 8.27%1.74% to 8.02%
Private Student Loan Rates2.99% to 13.65%0.94% to 11.98%
Direct Subsidized and Unsubsidized Loans (Undergraduate Borrowers)3.73%N/A
Direct Unsubsidized Loans (Graduate and Professional Borrowers)5.28%N/A
Direct PLUS Loans (Graduate and Professional Borrowers)6.28%N/A

What are interest rates for federal student loans?

Federal student loan rates change each year. Your rate depends on when you took out your loan.

LOAN FIRST DISBURSEDUNDERGRADUATE DIRECT SUBSIDIZED LOANSUNDERGRADUATE DIRECT UNSUBSIDIZED LOANSGRADUATE OR PROFESSIONAL DIRECT UNSUBSIDIZED LOANSDIRECT PLUS LOANS
July 1, 2021 – June 30, 20223.73%3.73%5.28%6.28%
July 1, 2020 – June 30, 20212.75%2.75%4.30%5.30%
July 1, 2019 – June 30, 20204.53%4.53%6.08%7.08%
July 1, 2018 – June 30, 20195.05%5.05%6.60%7.60%
July 1, 2017 – June 30, 20184.45%4.45%6.00%7.00%
July 1, 2016 – June 30, 20173.76%3.76%5.31%6.31%
July 1, 2015 – June 30, 20164.29%4.29%5.84%6.84%

Source: The Federal Register

Student loan news updates

The student loan landscape has been changing in recent months, driven by the coronavirus pandemic and forgiveness policies implemented by the Biden administration. Some current student loans trends to be aware of include:

  • Federal student loans are in administrative forbearance: President Biden extended the forbearance period for federal loans through August 31, 2022. Federal student loan payments are not required, and interest charges and collections activities are paused.
  • Borrowers with defaulted FFEL student loans are in forbearance: While FFEL student loans were originally not included in administrative forbearance, borrowers with defaulted FFEL student loans can now benefit from coronavirus relief.
  • Public Service Loan Forgiveness is undergoing an overhaul: An revision to what constitutes a “qualifying payment” toward PSLF has resulted in thousands of borrowers gaining progress toward loan forgiveness. Borrowers who apply for PSLF through Oct. 31, 2022, can benefit from this temporary waiver.
  • Student loan forgiveness is now tax-free: The $1.9 trillion stimulus package passed in March 2021 — also known as the American Rescue Plan — made student loan forgiveness tax-free through 2025.
  • Borrowers with total and permanent disabilities see loan forgiveness: The Department of Education recently revised documentation requirements for total and permanent disability discharge, which makes it easier for borrowers who qualify to see their student loan debt forgiven.

Best Interest Rates Student Loans

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