Student Loan Interest Rates

Student loans can be beneficial when scholarships, grants, and other financial assistance fall short, but the money is not free. Interest is charged on top of your primary debt (how much you borrowed initially). The interest rate will affect the total amount you will owe and your regular instalment. If you want to graduate with manageable debt, compare interest rates before you take out a loan.

Student Loan Interest Rates

The current interest rate for undergraduate federal student loans is 4.99 per cent for the 2022–23 school year, with the interest rate for graduate student loans being either 6.54 per cent for unsubsidized loans or 7.54 per cent for Direct PLUS loans. Interest rates on private student loans are determined mainly by a borrower’s credit score and may run anywhere from 2% to 14%.

Average Student Loan Interest Rate

According to the Education Data Initiative, which compiles information on the American educational system, the national average interest rate on student loans is 5.8 percent. That’s all types of student loans combined; the federal government is responsible for 90% of all student debt.

Interest payments on a $30,000 loan at 5.8% would total over $9,600 over ten years.


According to the data, specific demographics face a much higher average interest rate on student loans than others. The average speed, for instance, is 6.3% for families where the primary breadwinner has not completed college and 6.6% for those with annual earnings of less than $24,000.

Consolidating federal student loans results in a weighted average interest rate if you have loans with varying interest rates. Consolidating your debt with the federal government will not result in a cheaper interest rate, but refinancing with a private lender may.

College Enrollment Trends

The trend of individuals continuing their education through high school has slowed.

After staying off the grid to avoid spreading the virus, institutions reopened their courses and dormitories in the autumn of 2020. Within weeks, however, many schools were forced to postpone sports and other activities again due to widespread quarantines that necessitated a return to virtual courses.

Many predicted that community schools would experience increased enrollment as the epidemic continued. Still, statistics indicated that although attendance at certain prominent public universities was up for the fall semester, enrollment at several community colleges was down by as much as 30%.

Total enrolment in postsecondary institutions dropped to roughly 16.2 million in the spring of 2022, a decrease of 4.1% from the previous year. The last year also saw a reduction of 3.5 percent.

Undergraduate enrolment fell by 4.7% compared to the prior academic year. The number of first-year students was 9.4 percent lower than before the epidemic.

Enrolment levelled down in the autumn of 2022, although it was still 5.8 per cent lower than in 2019.

Enrollment continued to fall, dropping by 0.5% by spring 2023.

Federal Student Loan Interest Rates

Federal student loan interest rates are determined by Congress annually in the spring, with the highest yield from the most recent auction of 10-year Treasury notes occurring in May. Disbursements of student loans from July 1 through June 30 of the following year will be subject to the new interest rates. The interest rate on a federal loan will never change throughout the repayment period. A federal student loan’s interest rate has nothing to do with a borrower’s credit or financial standing.

Subsidized and unsubsidized loans have different interest rates. While enrolled at least half-time, throughout your grace period, and during any deferral periods, the federal government will cover the cost of your interest on your federally subsidized student loan. After payments begin, the total you owe will include the principal you borrowed plus interest and applicable fees.

Interest on federal unsubsidized loans begins to accrue as soon as the money is issued. If you don’t start paying your student loans until graduation or after the six-month grace period, the interest accrued will be applied to your principal debt.

Until the ongoing dispute against the federal student loan forgiveness program is concluded on June 30, 2023, interest rates on federal student loans will remain at 0%.

Private Student Loan Interest Rates

Banks, credit unions, and even some internet lenders provide private student loans. Lenders set their interest rates. Several private student loan companies offer both fixed and variable interest rates. The interest rate provided by the variable rate option varies with changes in the market.

Most student loan providers offer rates based on financial market indexes such as the Libor or Secured Overnight Financing Rate. 

Also Read: How to qualify for a student loan in UK

Rates are indexed to this index, but private lenders also consider factors including your credit history, income, and financial standing to set your APR. Interest rates are often lower for financially stable people with high credit scores. 

As part of the prequalification process, many lenders may do a soft credit check to get access to this data. With this inquiry, credit conditions and interest rates may be seen without negatively impacting your credit score. However, if you go through the application process, the lender may do a challenging credit investigation, which may lower your score.

Some loan providers may look at your employment experience, educational background, projected income, and other factors to determine whether they will provide a loan to you.


Current interest rates for federal student loans are relatively low compared to other periods. Before applying for student loans to finance your studies, you should familiarize yourself with the loan application process and interest rates. Use the FAFSA to apply for all federal student loans available to you, and then look into private student loans to fill in any gaps. Please don’t take out more money than you need, whether government or private.

If you have student loans and are having trouble making payments, refinancing might be an option; however, be aware that doing so could result in the loss of benefits associated with federal loans. If you think refinancing your student loans is a good idea, comparing the top refinancing providers that offer low rates and flexible payment options is essential.


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