Every year, federal student loan interest rates reset. Miss the update, and you could make decisions based on last year’s numbers, putting your budget at risk.
Even a small bump in interest rates can cost you thousands over the life of your loan. Whether you’re an incoming student, a grad borrower, or a parent considering a PLUS loan, locking in the right rate matters.
This guide breaks down the 2025-2026 federal student loan rates, how they’re set, how they compare to last year, and what it means for your wallet. Let’s dive in.
Federal Student Loan Interest Rates for 2025-2026
Here’s what you came for—the official federal student loan interest rates for the 2025-2026 school year:
These rates apply to loans disbursed between July 1, 2025, and June 30, 2026.
For new federal borrowers, these rates are fixed for the life of the loan, meaning they won’t change once your loan is issued.
How the Government Determines Student Loan Rates
Federal student loan interest rates aren’t just picked out of thin air. Each year, rates are tied to the 10-Year Treasury Note auction in May, plus a fixed add-on that depends on the loan type.
The Formula:
Federal Student Loan Interest Rate = 10-Year Treasury Yield + Fixed Add-On
As of the May 6, 2025, auction, the 10-Year Treasury yield was set at 4.342%, resulting in a 0.14 percentage point reduction in the federal student loan interest rates applicable to loans disbursed between July 1, 2025, and June 30, 2026.
| Loan Type | Fixed Add-On | Calculation | Final Interest Rate |
| Undergraduate Subsidized & Unsubsidized | +2.05% | 4.342% + 2.05% | 6.392% |
| Graduate Unsubsidized | +3.60% | 4.342% + 3.60% | 7.942% |
| PLUS Loans (Parents & Grad Students) | +4.60% | 4.342% + 4.60% | 8.942% |
Once the Treasury’s May auction closes, the government sets the new student loan rates based on that yield. That’s why these rates can shift each year.
The key thing to remember? Federal student loan rates are fixed per loan year. Once you take out your loan, your rate is locked in, even if next year’s rates change.
How This Year’s Student Loan Rates Stack Up to the Past
So, how do the 2025-2026 rates stack up compared to last year and previous years? Let’s look at a side-by-side snapshot:
Source: Historical Federal Student Loan Rates – FinAid.org
The shift in rates usually tracks with the direction of Treasury yields. If the government’s borrowing costs go up, so do student loan rates.
What Do These Rates Mean for Borrowers?
Higher student loan interest rates mean higher borrowing costs. That’s more interest paid over time and bigger monthly payments.
Sherpa Tip:
Want to manage your loan payments smartly? Check out our guide to federal student loan repayment plan options and strategies to find the best fit for you.
Lower rates can save you money on both fronts.
Example:
Let’s say you borrow $10,000 on a standard 10-year repayment plan.
- At 6.00% interest, your monthly payment would be about $111.02. Over 10 years, you’d pay roughly $3,322 in total interest.
- At 5.00% interest, your monthly payment would drop to around $106.07.
Over 10 years, you’d pay about $2,728 in total interest.
That’s a savings of nearly $595 just from a one-point difference in interest rates.
Even small differences matter when you’re borrowing for school.
If you already have federal loans, you can find your complete loan details, including interest rates, through the official federal database.
Key Deadlines for 2025-2026 Federal Student Loans
When it comes to federal student loans, timing is everything. Missing key dates can mean losing out on lower rates, limited financial aid, or even the chance to borrow at all for the upcoming school year. Here are the deadlines you need to know if you plan to borrow for 2025-2026.
- Loan Period Covered: July 1, 2025 – June 30, 2026
- FAFSA Opens: October 1, 2024
- Priority FAFSA Deadlines: Vary by state and school—don’t miss yours!
To qualify for these rates, your loan must first be disbursed within this window. Loans disbursed after June 30, 2026, will get next year’s rates.
If you’re thinking about borrowing, apply for FAFSA early. It gives you the best shot at securing your financial aid package and staying ahead of deadlines.
If you’re unsure whether you qualify as an independent student, check out our guide on how to qualify for independent student status on the FAFSA.