What are today's student loan rates?
While student loans can be a useful tool for funding your education after you've exhausted other options, like federal grants and scholarships, both federal and private student loans can be costly if you aren't careful. The interest on your loans can compound quickly, and as your balance grows, it can be tough to keep up with the payments — especially in a challenging economy.
Luckily, millions of student loan borrowers got some reprieve during the pandemic, thanks to a temporary federal student loan interest pause and a freeze on federal student loan repayments. But federal student loan interest is slated to resume on September 1 and payments will be due again starting in October. If you're worried about the high interest rates on your existing student loans eating into your budget, it may be worth doing the math to see if student loan refinancing could save you money.
And if you're still funding your education with the help of loans, the good news is that private student loan rates are dropping. But knowing exactly what student loan interest rates are right now can still help you to be better prepared for repayment down the line.
Start exploring the student loan options you qualify for here now.
What are today's student loan interest rates?
Rates vary on student loans based on various factors, including the type of loan — federal or private.
The following rates are current as of August 16, 2023, according to federal and private student loan rate national averages acquired by Money.com.
Federal student loan interest rates
Interest rates on federal student loans are fixed, so they stay the same throughout your repayment term. Federal student loan rates are determined based on the high yield of the 10-year Treasury Notes at auction. In turn, the rates on these types of loans can change each year for new borrowers.
As of August 16, the average federal student rates are:
- Direct subsidized (undergraduate students): 5.50%
- Direct unsubsidized (undergraduate students): 5.50%
- Direct subsidized (graduate students): 7.05%
- PLUS Loan (graduate students and parents of undergraduate students): 8.05%
Private student loan interest rates
The rates for private student loans are set by the lender. That means the rates on these loans, which are typically offered by banks, credit unions, or private student loan lenders and other financial institutions, can vary — sometimes drastically — based on the lender, the loan terms and other factors, like your credit score and overall creditworthiness.
Another factor worth noting is that unlike federal student loans, private student loans can have fixed or variable rates. While a loan with a fixed rate will have the same interest rate throughout the life of the loan, a student loan with a variable rate can result in the rate fluctuating over time.
As of August 16, the average private student rates are:
- Fixed interest rate: 4.42% to 15.99%
- Variable interest rate: 5.13% to 16.99%
If you're looking for a student loan to help fund your education, you have plenty of options to pursue today.
How to get a good student loan rate
If you're planning to use private student loans to pay for some or all of your education costs, it's important to maximize your chances of getting the best rate possible on your loans. In order to get a good student loan rate, consider the following.
Decide on a fixed or variable rate
Private student loans can come with fixed or variable rates, and each type of interest rate has potential benefits and downsides, so weigh them and determine what may work best.
For example, student loans with fixed rates will typically come with lower rates to start, but if rates drop over time, you'll continue to pay the higher rate of interest on your student loan. On the other hand, variable rates could start higher, but could drop in tandem if interest rates fall in the future, which could potentially save you money.
Decide on a loan term
Your loan term can also have an impact on the interest rates you're offered on private student loans. Shorter loan terms will typically come with lower interest rates, but will mean higher monthly payments since you have less time to pay off your loan balance and interest. A private student loan with a longer term will typically have a higher interest rate attached, but will result in paying less per month since you have more time to pay your loan off.
Ready to find out the student loan options you qualify for? Learn more here now.
Shop around
The rates you're offered on your student loans can vary drastically from one lender to the next. If you're borrowing from the first lender you find, you could be leaving money on the table by paying a higher interest rate than you would with another lender.
To avoid paying more than necessary for your interest rate, you should compare multiple lenders before signing on the dotted line. Many lenders will even allow you to check if you're pre-qualified before filling out a full application, so take advantage of the opportunity to prequalify and find out your rates with several different lenders.
What you may learn is that you're eligible for better rates or terms with a certain lender. Just be sure that you're comparing the same loan types and information to get an accurate picture of what your best offers are during the process.
The bottom line
Knowing what student loan rates are currently is an important part of preparing to borrow money for your education. While federal student loan rates won't change during the school year, private student loan rates can vary drastically from one lender to the next. And if you're using these types of loans to help finance your education, but you aren't staying on top of current student loan rate trends or shopping around to find the best rate possible, you could be leaving money on the table.
