Federal student loans first disbursed between July 1, 2026 and June 30, 2027 carry these fixed interest rates for the life of the loan: 6.52% for undergraduate Direct Subsidized and Unsubsidized loans, 8.07% for graduate and professional Direct Unsubsidized loans, and 9.07% for Direct PLUS loans. Each rate is 0.13 percentage points higher than the year before.
| Loan | 2026-27 rate | 2025-26 rate | Legal cap |
|---|---|---|---|
| Direct Subsidized and Unsubsidized, undergraduate | 6.52% | 6.39% | 8.25% |
| Direct Unsubsidized, graduate and professional | 8.07% | 7.94% | 9.50% |
| Direct PLUS (parents, and graduate students who still qualify) | 9.07% | 8.94% | 10.50% |
How the rates were set
Federal loan rates are set once a year by formula, not by Congress or the Department of Education. The base is the high yield at the May auction of the 10-year Treasury note, which on May 12, 2026 was 4.468%. Each loan type adds a fixed margin to that base: 2.05 points for undergraduate loans, 3.60 for graduate loans and 4.60 for PLUS loans. The result is capped by law at 8.25%, 9.50% and 10.50%. The rate is fixed for the life of each loan, so a loan disbursed this year keeps 6.52%, 8.07% or 9.07% even if rates fall next year.
The rate is not the whole cost. Each disbursement also carries a loan fee that is taken out before the money reaches the school: 1.057% on Direct Subsidized and Unsubsidized loans and 4.228% on PLUS loans. On a $20,000 Parent PLUS loan, that is about $846 the family borrows but never receives.
What the rates cost each month
New loans made on or after July 1, 2026 repay under the new rules: a tiered Standard plan whose length depends on the balance, or the Repayment Assistance Plan (RAP), where the payment follows income. Parent PLUS loans made after that date have only the tiered Standard plan. Three borrowers, run on the Finology calculator at this year’s rates:
- An undergraduate who borrows the full $27,000 over four years at 6.52%: $235 a month on the tiered Standard plan, paid off in about 15 years. On RAP with a $45,000 starting salary, $150 a month.
- A graduate student who borrows $100,000 at 8.07%: $776 a month on the tiered Standard plan over 25 years, about $232,938 repaid. On RAP at an $80,000 salary, $467 a month, with about $82,000 left to be forgiven at the end of 30 years.
- A parent who borrows the new $65,000 Parent PLUS maximum at 9.07%: $588 a month for 20 years, about $141,060 repaid, on the only plan open to that loan.
Each figure assumes the salary stays flat, which makes the RAP payments a floor rather than a forecast: a rising income raises a RAP payment.
Run your own loans at this year’s rates
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What did not change
- Loans you already have keep their rate. Federal rates have been fixed since 2006. A loan disbursed in 2024 at 6.53% stays at 6.53%.
- Consolidation does not lower the rate. A Direct Consolidation Loan takes the weighted average of the loans it repays, rounded up to the nearest one-eighth of a point.
- Next year’s rates come next May. Loans first disbursed on or after July 1, 2027 will use the May 2027 Treasury auction.
The rate is only one of this year’s changes. New loans also face new borrowing limits: Parent PLUS is capped at $65,000 per student, Grad PLUS is closed to new borrowers, and a student’s own federal loans now have a $257,500 lifetime limit.
Sources: rates, margins and caps from the Federal Student Aid electronic announcement on interest rates for Direct Loans first disbursed between July 1, 2026 and June 30, 2027 (June 4, 2026). Loan fees as published on StudentAid.gov for loans first disbursed on or after October 1, 2020 and before October 1, 2027. Monthly figures were computed by the Finology calculator on October 27, 2026 for the scenarios stated and are illustrative. This is educational information, not individual financial advice.
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