Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others, including an interest-free repayment freeze offered on federally-held student loans. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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The average student loan interest rate is 5.80%, according to a 2017 report by New America, a higher education policy think tank.
The true average interest rate on education debt is always changing, however, and has varied substantially due to many factors.
For instance, compare these average federal loan rates for the 2006-2021 period, which differ by loan type:
|Subsidized Loans (undergraduates)||4.59%|
|Unsubsidized Loans (for undergraduates)||4.46%|
|Unsubsidized Loans (graduate students)||5.84%|
|PLUS Loans (graduate students, parents)||6.85%|
The average private student loan interest rate, on the other hand, is even more fluid because each financial institution sets its own terms.
Here’s what you need to know about average loan rates and how they’ve changed over the decades — specifically:
- What’s the average interest student loan rate?
- What were historical student loan interest rates?
- What does the average student loan interest rate mean for you?
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. This means there is just one set rate for each type of loan.
The average student loan rate varies only depending on the type of loan – including whether it’s a federal or private loan – and the type of degree.
The rates for private student loans, on the other hand, are determined by each lender and can vary depending on the qualifications of the borrower.
Average federal student loan interest rate
Federal student loans hit historic lows recently. In fact, the average student loan interest rate for the 2020-2021 academic year ranged from 2.75% to 5.30%, a significant drop from the year prior.
|Federal student loan interest rates drop to lowest level ever|
|Loan Program||2019-2020 AY Rates||2020-2021 AY Rates|
|Undergraduate loans (Subsidized and Unsubsidized)||4.53%||2.75%|
|Graduate loans (Unsubsidized)||6.08%||4.30%|
|PLUS Ioans (Parent & Grad)||7.08%||5.30%|
Average private student loan interest rate
The average private student loan interest rate is harder to pin down, as banks, credit unions and online companies set their terms independently. Each has its own criteria, though the typical student loan rates of all private lenders tend to drift in the same direction, according to market factors like the federal funds rate and the London Interbank Offered Rate (LIBOR).
Applying with a cosigner for private loans, when possible, can help borrowers qualify for the lowest advertised rates.
Since the offered rates depend on the borrower’s credit and other factors, the average might not be as instructive as the ranges. Here are examples of the ranges for fixed and variable interest rates advertised by private student loan companies:
|Lender||Fixed APR||Variable APR|
|Citizens Bank||3.23% – 11.70%||1.03% – 11.01%|
|CommonBond||3.74% – 10.74%||3.80% – 9.36%|
|SoFi||2.99% – 10.66%||0.95% – 11.18%|
|Digital Federal Credit Union (DCU)||6.00% – 10.25%||5.00% – 9.25%|
|College Ave||2.94% – 12.99%||0.94% – 11.98%|
|Sallie Mae||3.50% – 12.60%||1.13% – 11.23%|
|Wells Fargo||4.99% – 10.72%||4.33% – 10.30%|
|Navy Federal Credit Union||5.75% – 0.00%||4.62% – 0.00%|
|LendKey||3.50% – 12.60%||1.13% – 11.23%|
|Rhode Island Student Loan Authority||4.24% – 4.24%||0.00% – 0.00%|
|New Mexico Educational Assistance Foundation||4.85% – 6.35%||0.00% – 0.00%|
|MEFA||3.95% – 5.95%||0.00% – 0.00%|
Keep in mind that whether you’re borrowing federal or private loans, the average student loan interest rate differs from the average student loan APR. Unlike the simple rate, APR accounts for fees, such as the loan origination fees charged by Uncle Sam and some banks.
Though the interest on your student loans can accumulate and make it harder to pay down the principal, average student loan interest rates are pretty low today by historical standards.
Student loan interest on federal loans is particularly low, thanks to a dip in the 10-year Treasury yields and authorization from the Congressional Budget Office. Before that, the federal funds rate hit zero because of the coronavirus pandemic’s effect on the economy at large in 2020.
Here are federal student loan interest rates by year:
Looking at the history of student loans, for a variety of reasons. Most recently, these highlights proved to be key:
|2010||In the wake of the Great Recession, lawmakers eliminated bank-based federal loans and made all loans available directly, lent by the Department of Education. The passage of the Health Care and Education Reconciliation Act (HCERA) allowed the government to set its own student loan interest rates.|
|2013||President Obama signed the Bipartisan Student Loan Certainty Act, which marked a change in how student loan interest rates are calculated. It also ended variable rates among federal loans. Four years later, Sen. Richard Burr (R-N.C.) said the law had saved borrowers $58 billion in student loan interest.|
|For more: The History of Student Loans and How It Affects You Today|
If you’re borrowing money for school, it’s important to understand how student loan interest works and to shop around for loans with the lowest rates possible to avoid spending more than necessary on your educational debt.
Federal loan interest rates adjust annually, though they rarely shift as drastically as they did for the 2020-2021 school year. Meanwhile, the best private student loans often have the lowest interest rates, but only the most creditworthy applicants qualify for them.
If you took out your loans years ago when interest rates were much higher, or at a time when your credit score was lower than it is today, it might be worth looking into ways to lower your interest rate so you could save money over time.
By refinancing your student loans to lower your interest rate, you could potentially cut your repayment costs significantly. Our student loan refinancing calculator can help you determine if you could save money by lowering your rate.
Student Loan Refinancing Calculator
Of course, refinancing isn’t the best option everyone, so do your homework to find out if it’s a good solution for you. Start by reviewing the pros and cons of refinancing student loans.
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.87% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.74% – 6.59%5||Undergrad & Graduate|
|1.90% – 5.25%6||Undergrad & Graduate|
|1.88% – 5.64%7||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.44% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates range from 2.49% APR to 6.94% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 6.59% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 11/15/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
7 Important Disclosures for Navient.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.