What is the interest rate on unsubsidized student loans

Q: Is it better to get subsidized or unsubsidized loans?

Whats the difference between Direct Subsidized Loans and Direct Unsubsidized Loans? In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

Q: Are unsubsidized loans a good idea?

If subsidized student loans wont cover the entire cost of your education, or if you simply cant prove financial need, then unsubsidized loans are the way to go. Although youll be paying more in interest, youll still have many payment options available after you graduate.

Q: Is it smart to take unsubsidized loans?

When youre deciding which student loans to pay off first, consider prioritizing your unsubsidized student loans over any subsidized loans. Again, interest on unsubsidized loans is always accruing, which means these student loans carry higher costs and therefore more financial risk.

Interest rates for Direct Subsidized or Unsubsidized Loans vary depending on loan type, when the loan was first disbursed, and your degree status (undergraduate or graduate).

Table of Contents Show

For more interest rate information:
Current student loan interest rates
Average student loan interest rate
Student loan interest rate calculator
How student loan interest rates work
Key terms in this story
Does unsubsidized loan accrue interest?
Is it better to get subsidized or unsubsidized loans?
Are unsubsidized loans a good idea?
Is it smart to take unsubsidized loans?

Period loans first disbursed	Direct Subsidized	Direct Unsubsidized
Undergraduate	Graduate	Undergraduate	Graduate
7/1/22 - 6/30/23	4.99 percent	Not applicable	4.99 percent	6.54 percent
7/1/21 - 6/30/22	3.73 percent	Not applicable	3.73 percent	5.28 percent
7/1/20 - 6/30/21	2.75 percent	Not applicable	2.75 percent	4.3 percent
7/1/19 - 6/30/20	4.53 percent	Not applicable	4.53 percent	6.08 percent
7/1/18 - 6/30/19	5.05 percent	Not applicable	5.05 percent	6.60 percent
7/1/17 - 6/30/18	4.45 percent	Not applicable	4.45 percent	6 percent
7/1/16 - 6/30/17	3.76 percent	Not applicable	3.76 percent	5.31 percent
7/1/15 - 6/30/16	4.29 percent	Not applicable	4.29 percent	5.84 percent
7/1/14 - 6/30/15	4.66 percent	Not applicable	4.66 percent	6.21 percent
7/1/13 - 6/30/14	3.86 percent	Not applicable	3.86 percent	5.41 percent
7/1/12 - 6/30/13	3.4 percent	Not applicable	6.8 percent
7/1/11 - 6/30/12	3.4 percent	6.8 percent	6.8 percent
7/1/10 - 6/30/11	4.5 percent	6.8 percent	6.8 percent
7/1/09 - 6/30/10	5.6 percent	6.8 percent	6.8 percent
7/1/08 - 6/30/09	6 percent	6.8 percent	6.8 percent
7/1/06 - 6/30/08	6.8 percent	6.8 percent	6.8 percent
Prior to 6/30/06	Contact your loan holder to determine the interest rate

Military service members may be eligible for reduced interest rates.

If you need more information about the interest rate(s) for your student loans, contact your loan holder. If you aren't sure which institution or servicer holds your loans, locate your loan holder.

For more interest rate information:

Federal Perkins Loans
Direct PLUS Loans for graduate and professional students
Direct PLUS Loans for parents

Learn more about private student loans

If you have begun repayment of your federal student loans, their interest rates have been set to 0% until after Dec. 31, 2022, and no payment is due before then.

If you're still borrowing for your education, the federal student loan interest rate for undergraduates is 4.99% for the 2022-23 school year. Federal rates for unsubsidized graduate student loans and parent loans are higher — 6.54% and 7.54%, respectively. The rates for the coming year go into effect on July 1.

Private student loan interest rates can sometimes be lower than federal rates, but approval for the lowest rates requires excellent credit. If you have good credit, you may be able to refinance existing student loans to get a lower rate.

Current student loan interest rates

Rates updated monthly.

Federal student loan interest rates are increasing for the 2022-23 school year and apply to loans disbursed between July 1, 2022, and July 1, 2023. The interest rates for all new federal direct undergraduate student loans are 4.99%, up from 3.73% in 2021-22. Unsubsidized direct graduate student loan rates are 6.54%, up from 5.28%. Rates for PLUS loans, which are for graduate students and parents, are 7.54%, up from 6.28%.

Federal student loan interest rates by year

To apply for federal student loans, as well as grants and work-study, fill out the Free Application for Federal Student Aid — this can help. Any student, regardless of their financial need, typically qualifies for unsubsidized student loans, and students with a financial need may qualify for subsidized loans. Subsidized loans are a better deal because the government pays the interest that accrues while you’re in school.

Federal student loan fees are taken as a percentage of the total loan amount and deducted proportionally from each loan disbursement, meaning you'll receive slightly less than the amount you borrow.

Academic year

Undergraduate

Graduate

Parent PLUS, Grad PLUS

2022-23

4.99% interest 1.06% fee

6.54% interest 1.06% fee

7.54% interest 4.23% fee

2021-22

3.73% interest 1.06% fee

5.28% interest 1.06% fee

6.28% interest 4.23% fee

2020-21

2.75% interest 1.06% fee

4.30% interest 1.06% fee

5.30% interest 4.24% fee

2019-20

4.53% interest 1.06% fee

6.08% interest 1.06% fee

7.08% interest 4.24% fee

2018-19

5.05% interest 1.06% fee

6.60% interest 1.06% fee

7.60% interest 4.25% fee

2017-18

4.45% interest 1.07% fee

6.00% interest 1.07% fee

7.00% interest 4.26% fee

2016-17

3.76% interest 1.07% fee

5.31% interest 1.07% fee

6.31% interest 4.28% fee

2015-16

4.29% interest 1.07% fee

5.84% interest 1.07% fee

6.84% interest 4.27% fee

2014-15

4.66% interest 1.07% fee

6.21% interest 1.07% fee

7.21% interest 4.29% fee

Source: U.S. Department of Education, Federal Student AidInterest rates effective July 1 of each year. Loan fees effective October 1 of each year.

Private student loan interest rates by lender

It’s generally best to max out your federal student loan options before taking out a private student loan. If you need one, shop around first to ensure you get the lowest rate you qualify for. If you don’t meet a lender’s credit requirements, you can apply with a co-signer who does.

Current private student loan interest rates, updated monthly:

Student loan refinancing rates by lender

Consider student loan refinancing if your credit score is at least in the high 600s, you have enough income to afford your debts and other expenses, and you’re comfortable giving up federal benefits like income-driven repayment and Public Service Loan Forgiveness. Before refinancing, shop around to find the lowest rate you qualify for.

Current student loan refinancing rates, updated monthly:

Lender

APR

Get started

Fixed: 3.99% - 8.99% Variable: 3.24% - 7.99%

Check rates

Fixed: 3.99% - 8.99% Variable: 3.99% - 8.99%

Check rates

Fixed: 4.29% - 7.29% Variable: 2.48% - 7.98%

Check rates

Fixed:3.99% - 10.68% Variable:2.81% - 7.21%

Check rates

Fixed: 4.49% - 6.9% Variable: 2.5% - 6.8%

Check rates

Ready to compare all your student loan refinancing options?

Average student loan interest rate

The average student loan interest rate is 5.8% among all households with student debt, according to a 2017 report by New America, a nonprofit, nonpartisan think tank. That includes both federal and private student loans — about 90% of all student debt is federal.

With a 5.8% interest rate on $30,000 of student loans, a borrower would pay about $9,600 in interest throughout 10 years.

The average student loan interest rate is higher among some groups, according to the report. For instance, the average rate is 6.3% among households where the borrower didn’t complete a college degree, and 6.6% among households with incomes less than $24,000.

If you have multiple student loans with different rates, the weighted average interest rate is the rate you'll have if you consolidate the loans through the federal government. Federal consolidation won't lower your average interest rate, but refinancing with a private lender could.

Student loan interest rate calculator

How student loan interest rates work

Student loan interest rates work differently, depending on whether the loan is federal or private. For federal loans, every borrower taking out the same type of federal loan in a given year has the same interest rate. For private loans, borrowers with higher credit scores generally qualify for lower rates and borrowers with lower credit scores get higher rates.

Federal student loans:

Congress sets interest rates yearly based on the 10-year Treasury note
Most have fees charged as a percentage of the total loan amount
Rates are fixed for the life of the loan

Private student loans:

Interest rates are typically credit-based
Most private lenders don't charge origination fees
Variable rates are subject to change monthly or quarterly

Tips for repaying student loan interest

Student loan interest accrues while you’re in school — unless you have subsidized federal loans — so you’ll owe more than you initially borrowed when you enter repayment. You can save on interest by:

Paying off interest before your grace period ends. When your student loans enter repayment, the unpaid interest will be capitalized, or added to your principal balance. Avoid costly interest capitalization by making monthly interest-only payments or paying a fixed amount — say, $25 — while you’re in school. Alternatively, pay off the interest during your grace period using graduation money or income from your first post-college job.
Avoiding income-driven repayment, if possible. Federal income-driven repayment plans can keep cash-strapped borrowers out of default, but they also cost borrowers more interest in the long run. If you can afford to make federal loan payments on the standard, 10-year repayment plan, do it.
Watching your overall financial health. Although you’ll save the most in student loan interest by paying off the loan as soon as possible, other financial goals are higher priority. Before paying extra on student debt, build an emergency fund, contribute to a 401(k) or IRA, and pay off high-interest debt such as credit cards.

Key terms in this story

Fixed interest: An interest rate that does not change during the life of a loan. All federal student loans have fixed interest rates, but private loans can offer fixed or variable interest rates. Fixed interest is the safer option because you don’t have to worry about your rate — and payment — increasing.

Variable interest: Variable interest rates can change monthly or quarterly depending on the loan contract and come with rates caps as high as 25%. Variable interest loans are riskier than fixed interest loans, but can save you money if the timing is right.

Private student loan: Education funding from banks, credit unions and online lenders instead of the federal government. Private loans are best used to fill funding gaps after maxing out federal loans.

Does unsubsidized loan accrue interest?

Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan).

Is it better to get subsidized or unsubsidized loans?

What's the difference between Direct Subsidized Loans and Direct Unsubsidized Loans? In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

Are unsubsidized loans a good idea?

If subsidized student loans won't cover the entire cost of your education, or if you simply can't prove financial need, then unsubsidized loans are the way to go. Although you'll be paying more in interest, you'll still have many payment options available after you graduate.

Is it smart to take unsubsidized loans?

When you're deciding which student loans to pay off first, consider prioritizing your unsubsidized student loans over any subsidized loans. Again, interest on unsubsidized loans is always accruing, which means these student loans carry higher costs and therefore more financial risk.