What’s the Average Student Loan Interest Rate?


Like any type of loan, simply accepting the first interest rate that comes your way can be unwise and waste you a lot of money in the long run. Student loan interest rates are no exception.

Consider how much of the $1.3 trillion in national student loan debt could be attributed to borrowers who are stuck with an inflated APR, causing them to accumulate more debt than necessary and making it hard to put a significant dent in their balances.

Understanding today’s student loan interest rates can help you identify whether you’re getting a good deal or if it’s time to investigate ways to lower your interest rate and save thousands of dollars over time.

Average student loan interest rates today

The average student loan rate depends on the type of loan — including whether it’s a federal or private loan — and the type of degree.

When it comes to federal student loan interest rates, there technically is no “average” because rates are set by the government each year and do not change based on the characteristics of individual borrowers.

Private student loans, on the other hand, are determined by each lender and can vary depending on the qualifications of the borrower (more on that below).

Federal student loan interest rates

Current interest rates on federal student loans are as follows:

student loan average interest rate.png

Private student loan interest rates

The average private student loan interest rate is also hard to nail down. That’s because there are dozens of private lenders, each with their own algorithms and underwriting standards used to determine the rates they offer.

Further, the private student loan interest rates offered by a single lender can vary widely depending on the credit history and personal financial situation of each individual borrower.

For example, the lenders in our list of the best banks for student loan refinancing offer variable rates as low as 2.13% for the most qualified borrowers — but up to 9.39%. That’s a pretty big spread, and one that is entirely dependent on the individual applicant.

To help you get a sense of where the average private student loan interest rate might hover, you can check out today’s rates being offered.

Finaid.org published a full list of private student loan lenders and their interest rates, which you can check out below. Note that interest rates are subject to change at any time at the discretion of individual lenders. Be sure to always verify interest rates with the lender. You can also get more detailed information about these loans on the Finaid.org website.


Historical student loan interest rates

Though the interest on your student loans can accumulate and make it seem that much harder to pay down the principal, average student loan interest rates are pretty low today by historical standards.

Take a look at how federal rates have changed over the last 20 or so years, with some highlights:

1992-93, 6.94% average interest rate: This is the school year that variable interest rates appear for student loans. If close to 7% seems high enough, loans issued in the prior decade stay at a fixed rate of 8% to 10%!

1993-94, 6.22% rate: The federally-backed direct loan program is begun by Congress to give borrowers more options apart from banks.

1998-99, 7.46% rate: Congress incorrectly predicts that direct loans will have entirely replaced private loans, even though they still represent more than half of all student loans.

2008-09, 6% interest rate: After a few years fixed at 6.8%, Congress approves a reduction to 6% for Federal Stafford Loans.

2010-11, 4.5% subsidized Stafford, 6.8% other loans: Lawmakers also eliminate bank-based Federal loans; all loans are now available directly.

In 2013, President Obama signed the Bipartisan Student Loan Certainty Act, which marked a change in how student loan interest rates are calculated.

According to the Edvisors Network, APRs on all loans taken out after July 1, 2013 are linked to the current 10-year U.S. Treasury rate. The law also capped all Federal Stafford loans at 8.25% for undergrad students, 9.5% for grads.

Obama’s mandate also maintained that while rates will remain fixed (no more variable loans), each year’s student loan average interest rate may fluctuate depending on market conditions.

What does this mean for you?

If you took out your loans years ago when interest rates were much higher, or at a time when your creditworthiness was not at its best, it might be worth looking into refinancing.

By refinancing your student loans and shaving off a couple percentage points or more, you can potentially save yourself thousands of dollars in interest over the life of your loan.

Of course, refinancing isn’t for everyone, so do your homework to find out if it’s a good option for you. In fact, you can start with the 10 questions to ask before refinancing your student loans.

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.