Average Student Loan Interest Rates in 2026

College loans provide the money you need to pay for school. However, it's important to understand the current student loan interest rates, as you'll pay interest when you borrow. This includes knowing how federal and private student loan interest rates differ. 

This guide explains average federal and private student loan rates, how rates are determined, and ways to lower your student loan rate.

Compare current private student loan rates

Average interest rates for private student loans

Interest rates on private student loans can vary widely. For example, private lenders on the Credible platform offer fixed-rate APRs from 2.65% to 17.99%, and variable-rate APRs from 3.5% to 17.99% as of April 2026.

Average interest rates for federal student loans

How are student loan interest rates determined?

Multiple factors determine student loan interest rates, and those factors differ for federal and private student loans. Here’s how rates are set:

How private lenders set student loan interest rates

Private student loan lenders determine your interest rate based on the risk you present as a borrower. They look at your credit score, credit report, income, employment status, and current debt to determine the likelihood of default. 

If you don’t have strong credit but qualify for a loan otherwise, the lender might deny your application or lend to you at a higher rate to hedge the risk. 

How federal student loan rates are set

Federal student loans have fixed interest rates based on 10-year Treasury yields. Rates are determined using a formula set by Congress. 

Rates are released before the upcoming academic year and are valid for loans disbursed from July 1 of the current year to June 30 of the following year. Once funds are disbursed, your loan rate doesn’t change.

Fixed vs. variable student loan interest rates

Student loans can have fixed or variable interest rates. 

• Fixed-rate loans: The rate remains the same during the entire repayment term. All federal student loan rates are fixed, and most private lenders offer fixed-rate loans. 
• Variable-rate student loans: Rates are tied to market indices, like the Secured Overnight Financing Rate (SOFR). Rates can increase or decrease over time, affecting monthly payments.

Lenders sometimes offer a lower starting rate on variable-rate loans compared to fixed-rate options. However, variable rates introduce uncertainty into your budget, and if market rates trend high, your payment and borrowing costs increase.

How your credit score affects student loan interest rates

How do interest rates affect your total student loan cost?

Interest rates directly affect your student loan costs as higher rates result in more total interest paid over time.

“Interest is the money-making outcome lenders want,” says Tom O’Hare, holistic college adviser at Get College Going. “The longer the term, the higher the balance, the lower the monthly payment, the more revenue the lender will yield.” 

Typically, interest accrues daily on student loans. You can calculate your daily interest with this formula: 

Daily interest = (Existing loan principal amount x Interest rate) ÷ 365.25

Even small rate differences have a big impact when you're borrowing a large amount or borrowing over a long time period.

If your loans are deferred and you don't make payments that cover interest, the unpaid interest capitalizes. That means it's added to your principal balance, so you’ll pay interest on your interest. This is one of the biggest reasons why student debt can grow to unmanageable levels.

How can you get a lower student loan interest rate?

You cannot change your federal student loan interest rate. But if you’ve maxed out federal student loans and are borrowing from private lenders, you can take steps to reduce your financing costs.

Here are strategies that can help you access lower private loan interest rates. 

Apply with a cosigner

Private student loan lenders reserve the best rates for borrowers with strong credit. If you don't have a good or excellent credit score, applying with a creditworthy cosigner strengthens your application. 

Cosigners legally share repayment responsibilities, so they are typically close family members or a spouse. 

Improve your credit

Building your own credit is also an option. 

“Private loans are fully underwritten, so borrowers can prepare by improving their credit profiles, such as credit score and debt-to-income ratios, so they can qualify for the best rates,” says Jack Wang, college financial aid adviser with Innovative Advisory Group.

Timely payments and credit utilization are the two factors that have the greatest impact on your FICO score. These factors account for 35% and 30%, respectively in your credit scoring formula. 

Unfortunately, developing a track record of consistent, on-time payments and paying off existing debt doesn't happen overnight, so taking time to build credit may not work with your borrowing timeline. The sooner you can start building credit, the better your chances of getting an affordable loan. 

Compare multiple offers

Each lender has its own underwriting criteria, so private student loan rates differ across lenders. To get a true sense of the rates you qualify for, check your interest rate by prequalifying with a handful of private lenders. 

Make sure you compare apples to apples — for example, when evaluating your rate offers, confirm the loan term, grace period, repayment plans, and other loan details to determine the best loan for you. Use a student loan interest calculator to help you do the math.

Refinance your loan

Refinancing can only be done with private lenders, and it replaces your current loan with a new refinance loan with different terms. It can make loan payoff cheaper if you qualify for affordable student loan refinance rates that are lower than the rates on your current debt. 

Refinancing can be a good option if your credit has improved significantly since you first got the loan, or if rates have dropped recently. 

“With the prospect of lower interest rates on the horizon, refinancing may become a preferred strategy again, especially for recent borrowers,” says Joseph Orsolini, president of College Aid Planners, Inc. Orsolini also notes that variable-rate private loans will make a comeback as rates begin to fall. 

While refinancing is a good strategy for private student loans, it's not usually recommended for federal loans because you’ll lose access to federal programs, including loan forgiveness, income-driven repayment, and extended deferment and forbearance options.