Borrowing for college will be costlier this year.
Federal student loan rates will increase in 2026-27, rising to a mark just shy of their highest levels in more than a decade. Undergraduate borrowers will have an interest rate of 6.52%, while the rate climbs to 8.07% for graduate students and 9.07% for parents and graduate students taking out PLUS loans, the Department of Education announced on June 4. Rates for federal student loans are set each spring based on a formula tied to the 10-year Treasury auction in May. The rates, which run from July 1 to June 30, are fixed for the life of the loan and apply to all borrowers regardless of credit score, income or other factors.
Here’s a look at how federal student loan rates have fluctuated over the past decade: The higher rates add to the challenges faced by many borrowers this year as new caps on federal loans are expected to force 28% of graduate student borrowers to seek private loans to fill gaps. Roughly one-third of parent borrowers may also be pushed toward private lenders. Studies suggest about 40% of prospective borrowers won’t qualify for private loans.
Private student loan rates are often higher than federal rates, although certain borrowers with a strong financial profile can qualify for considerably lower rates.
[Read: Best Private Student Loans.]
College borrowers stuck with high rates could choose to refinance their student loans in the future if rates go down, but that would require converting their federal loans to private loans and forfeiting various benefits and protections.
The federal student loan rates affect payments for borrowers who are repaying their loans on a standard repayment plan. Borrowers on income-driven repayment plans make monthly payments based on their income rather than the interest rate in their loan.
The rate increase means that many borrowers will pay more each month and over the life of their loan. Borrowers take out a new federal loan each academic year, so they can’t try to lock in a better federal rate for all of their college years if they anticipate rates will increase.
Here’s a look at what $10,000 in student loans would cost you on a standard repayment plan for each type of federal loan. Nearly 43 million people have roughly $1.7 trillion in student loans outstanding, according to the Department of Education.
More from U.S. News
Key Things to Know About Federal Student Loans in 2026
Where Do Federal Student Loans Come From?
Understanding Federal Student Loan Types
Your Federal Student Loans Will Cost More This Year. Here Are the New Rates originally appeared on usnews.com
