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Student loans can help bridge the gap between the total cost of going to college and the amount of financial aid your school offers. There are two main types of student loans: federal loans with benefits and fixed rates that apply to all borrowers, and private ones with rates and terms that vary.
You're almost always better off going with federal student loans because you're likely to get a lower interest rate, and they come with special benefits and protections. However, you can only refinance student loans through private lenders.
See Insider's picks for the best student loan refinance lenders >>
Student Loan Refinance Rates
While rates have held in a relatively tight range in recent weeks, the cost of refinancing student loans has been rising over the past year as Federal Reserve policy makers increased the federal funds rate to try to slow inflation. Although not directly linked to student loans, higher Fed rates ultimately influence borrowing costs for everything from college to real estate, credit cards, and automobiles.
Private Student Loan Interest Rates
5-Year Fixed Student Loan Rates
A loan with a shorter term will have a higher monthly payment than a longer-term loan, but you'll pay less in total interest over the life of the loan. Short-term loans typically have lower interest rates than long-term loans. A short-term loan may be right for you if you can afford a larger monthly payment and want to pay off your student loan debt faster.
Here are the latest five-year fixed refinance rates for undergraduate and graduate loans:
| Undergraduate | Graduate | |
| This past week | 6.95% | 5.87% |
| Two weeks ago | 6.74% | 5.94% |
| 6 months ago | 6.03% | 5.01% |
10-Year Fixed Student Loan Rates
Longer-term loans cost more overall, but they come with lower monthly payments than short-term loans. This can give you more flexibility in your budget, but you'll pay more in interest over the life of the loan. Longer-term loans usually have higher interest rates than loans you pay off more quickly.
Here are the latest 10-year fixed refinance rates for undergraduate and graduate loans:
| Undergraduate | Graduate | |
| This past week | 6.97% | 6.27% |
| Two weeks ago | 6.73% | 6.13% |
| 6 months ago | 5.85% | 5.54% |
Private Student Loan Rates vs. Federal Student Loan Rates
Be sure to exhaust all of your federal student loan options before turning to a private lender. Federal student loans almost always have lower interest rates than private loans. Private loans require a credit check, and many students either have no credit history or a low credit score. That means they're likely to be offered a higher interest rate than they'd pay for a federal student loan.
See Insider's picks for the best private student loans >>
Congress sets the interest rates for federal student loans, which are the same for all borrowers. There is no credit check required, and you don't have to show proof of income or have a co-signer. Federal student loans also have some benefits such as the ability to sign up for an income-driven repayment plan, deferment, forbearance, or forgiveness, none of which are typically available with private loans.
Federal student loan rates have also been rising. The cost of borrowing across all Department of Education loans is going up again for the 2023-2024 school year after some rates saw the biggest increases in decades during the prior period. While the rates private lenders charge aren't tied to federal loan rates, they're likely to also rise when federal loan rates do because they don't have to stay as low to remain competitive.
Federal Student Loan Rates For 2023-2024 School Year
| Loan type | Borrower type | 2022-2023 | 2023-2024 |
|---|---|---|---|
| Direct Subsidized Loans and Direct Unsubsidized Loans | Undergraduate | 4.99% | 5.50% |
| Direct Unsubsidized Loans | Graduate or professional | 6.54% | 7.05% |
| Direct PLUS Loans | Parents and graduate or professional students | 7.54% | 8.05% |
Source: US Department of Education
Student Loan Rates Frequently Asked Questions
Federal student loan interest rates for the 2023-2024 school year are 5.5% for undergraduates and 7.05% for graduates.
The cost of borrowing for college has increased along with interest rates on everything from credit cards, mortgages, and auto loans over the past year as the Federal Reserve has aggressively raised the federal funds rate. The higher base rates ultimately affect interest rates throughout the economy.
You'll face many consequences if you default on a student loan. It can hurt your credit score, eat into your earnings, and reduce your tax refund and government benefits.
Whether or not you should refinance your student loan depends on your specific financial situation. You may want to consider alternatives such as a less expensive school, scholarships, or a side job to earn more money. Whatever your decision is, make sure you understand the terms of your new loan before making a choice.
Getting approved for a student loan without a co-signer usually includes factors outside of your credit score. Lenders may consider your grade point average, field of study, projected future earning potential, and more when making approval decisions.
No, private student loans won't qualify for any federal forgiveness programs.
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