Student Loan Interest Rates Updated for 2024, 2025

Interest rates on student loans have been updated to the highest level in 16 years.

Federal education loans disbursed after July 1, 2024, are subject to the new rates following an update from the government, with some loan types having the highest rates since the 2008 to 2009 academic year.

Funds provided by the government for undergraduate degrees are now disbursed with a 6.53 percent interest rate, up from 5.5 percent. Graduate loans come with a rate of 8.08 percent, up from 7.05 percent, and parent PLUS loans and graduate PLUS loans are charged interest at 9.08 percent if disbursed after July 1—1.03 percent higher than the previous rate of 8.05 percent.

The rate applies to all loans taken out through July 1, 2025, when a new rate will be applied. This can go up or down and is set by Congress every year.

Loans last passed the 6 percent interest mark between 2006 and 2008, according to Federal Student Aid, when the rate was 6.8 percent. In 2009, it dropped to 6 percent.

Borrowing in more recent years has been cheaper, with the interest rate hitting a 16-year-low for the 2020-21 academic year at 2.75 percent. It has steadily risen, up to 3.73 percent for 2021-22, 4.99 percent for 2022-23 and 5.50 percent for the 2023-24 academic year.

Federal student loans have fixed interest rates, meaning the amount you are charged on your loan does not change throughout the course of the loan. This means if you first took out your loan between July 1, 2020, and June 30, 2021, you will still be paying 2.75 percent, and the new rate for the following years does not apply to you.

Loans for the 2024-25 academic year must be taken out after July 1, meaning the new, higher rate cannot be avoided for those wanting to borrow from the federal government, although privately funding further education is available. However, private loans come with their own interest rates that are not set by the federal government, which can often be higher and can be variable throughout the course of the loan.

The higher interest rates come as a recent three-year study conducted by the Employee Benefit Research Institute (EBRI) and JP Morgan Asset Management found that student loan debt has a “statistically significant negative impact” on how much workers are able to contribute to their retirement.

Nearly 43 million Americans have federal student debt, with the average student debt at roughly $38,000.