What Is a Good Student Loan Rate?

Your student loan interest rate has the greatest impact on your total borrowing costs. The higher the rate, the more you’ll pay in interest.

That leads many borrowers to ask: What is a good student loan rate? The answer can vary widely depending on the type of student loan and the borrower’s financial profile. 

Current private student loan rates

What is the average student loan interest rate?

Federal student loan rates are standardized and remain fixed throughout repayment. Each year, Congress sets federal student loan interest rates for loans disbursed that academic year (for example, after July 1, 2025, and before July 1, 2026). Because each federal loan has a predetermined rate, there isn’t an average federal student loan rate to reference. The rates are the same for all borrowers, regardless of their credit.

“Federal loans don’t go through traditional underwriting, so credit scores and income don’t determine approval or rate,” explains Emilio Cabuto, certified financial planner (CFP) at Verus Capital Partners. “Eligibility is based on things like enrollment status, cost of attendance, and financial need.”

Average fixed-rate APRs for private student loans available on the Credible platform in late November 2025 were 7.64% for 10-year loans, with variable-rate APRs at 8.08% for five-year loans. These rates are based on prequalified borrowers with credit scores of 720 or higher.

What is considered a good student loan rate?

A good student loan rate depends on various factors. The main difference is in the type of loan. For federal student loans, undergraduates get the lowest rates, with Direct Subsidized and Direct Unsubsidized Loans at 6.39% for the 2025-26 school year. 

Private student loans, on the other hand, may have either fixed interest rates or variable interest rates. Rates vary depending on the borrower’s credit score, income, degree type, debt-to-income ratio (DTI), and the lender. 

If you have a cosigner with good credit, you may qualify for a better rate.

“For those with excellent credit or a strong cosigner, landing a fixed rate in the 4% to 6% range would be considered excellent,” says Cabuto. “On the flip side, paying double digits (10% or more) typically signals higher risk.”

How do federal and private student loan rates compare?

Federal and private student loan rates have some important differences. For example, federal loans typically don’t require a credit check, but private student loans do. Here’s an overview of federal vs. private student loan rates and how they differ. 

What factors affect your student loan rate?

Federal student loan borrowers will have set rates on any loans they take out for school. That will depend on what the fixed rates are for the academic year and when the loans get disbursed. Congress sets federal student loan rates annually based on the 10-year Treasury yield.

Private loan rates vary by borrower depending on their individual risk factors and financial profile. Some factors that determine your private student loan rates include:

• Loan type: The type of private student loan you take out can also affect the rate. For example, undergraduate, graduate, and professional loans may have different interest rates. 
• Type of interest rate: You may have the option to choose between a fixed interest rate and a variable one. These rates typically differ. Fixed rates lock in the rate you have, while variable rates change based on market conditions. 
• Credit score: Your credit score is a major factor, as it shows lenders how likely you are to repay your loans. If you have a high credit score, you typically qualify for lower rates. In contrast, a lower credit score can lead to higher rates. 
• Debt-to-income ratio (DTI): Lenders look at your DTI to assess your financial health. A high DTI might mean that you’re overextended and a large portion of your income is going toward debt repayment. 
• Income: Your income can give lenders assurance that you can afford to repay what you borrow. 
• Repayment terms: The repayment term you choose can impact private student loan interest rates. If you have a shorter repayment period, you may qualify for a lower interest rate. Longer repayment periods that could extend past a decade typically have higher interest rates. 
• Market conditions: Economic policy can have an impact on private student loan rates, particularly variable ones. So when the Federal Reserve cuts the federal funds rate, student loan rates may drop. Conversely, when there’s a rate hike, your rate could increase. 
• Cosigner status: You may have higher chances of approval and qualify for a good student loan rate if you apply with a cosigner who has excellent credit. 

How to get a better student loan rate

The interest rate on your student loans has the biggest impact on the total cost of repayment. Lowering your interest rate could make a substantial difference in how much you pay over the life of the loan. Here’s how to get a low student loan rate.

Improve your credit and financial profile 

Private student loan lenders evaluate your credit score, income, and other factors when reviewing your application and determining what rate to offer you if you qualify.

“Because private loan rates hinge on credit profile, borrowers should: Boost or at the very least maintain their credit score, reduce revolving debt, demonstrate stable income, use a strong cosigner, and shop multiple lenders using prequalification tools,” says Cabuto.

Some of the most impactful things you can do are to make all payments by their due dates and keep low balances. You may also want to avoid applying for other forms of credit before applying for private student loans. 

Use a cosigner with a strong credit profile 

Federal student loans don’t have a traditional credit check. Even with PLUS loans that have a credit check, the main criterion is that borrowers do not have an “adverse credit history,” such as defaults or bankruptcies. That’s not the case with private student loans. So if your credit profile doesn’t meet the eligibility requirements or would lead to substantially higher interest rates, getting a cosigner with a strong credit profile is a smart idea. 

Consider economic factors 

Economic policy can help shape interest rates. Getting a lower interest rate can sometimes also be about timing. 

“Borrowers should also be mindful of the interest rate environment, especially around Fed meetings, since rates often move with Treasury yields and Fed policy. Timing your application after a rate cut, or before an expected hike, may help secure a better offer,” adds Cabuto.

Sign up for autopay

You may be able to lower your interest rate by 0.25 percentage points if you sign up for automatic payments. Many federal loan servicers and private student loan lenders offer this as a perk. Signing up for automatic payments can help you avoid late fees and missed payments, and can potentially lower your interest rate. 

Compare multiple lenders 

If you see a good student loan rate from a lender, you might want to jump on it. But it’s best to compare three to five private student loan rates so you have an idea if it’s really competitive. Many private lenders let you get prequalified without hurting your credit score. 

“It's so important to shop around with multiple lenders before taking out private loans or refinancing, much like with auto or home loans, you can get lower rates with some lenders over others,” says Glenn Sanger-Hodgson, a certified student loan professional (CSLP) and founder of Shonan Gold Financial LLC.