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Are Student Loan Interest Rates Fixed or Not

The interest rates on federal student loans for undergrads are 3.73% for undergraduates and 5.28% for graduate students, who receive unsubsidized and plus loans, respectively.

The interest rates on private student loans range from 1% to 13%, which are determined by your credit score.

In this article, we’ll be discussing the rates on federal student loans, private student loans, and whether or not they are fixed or variable.

How Are Student Loan Interest Rates Determined?

The interest rates on federal and private student loans are frequently linked, and when federal student loan rates fall, so do private student loan rates.

This is due to their similar economic patterns, which tend to mirror broader market fluctuations.

The Difference Between Fixed and Variable Rates

The interest rates on fixed-rate loans don’t change throughout the loan term, so you’ll know up front how much your total borrowing cost will be and what your monthly payments will look like.

And depending on market conditions, variable interest rates change from month to month, so your monthly payment may rise or fall from time to time.

The Current Interest Rate for Student Loans (February 2022)

The interest rate on student loans varies depending on the loan type you need or desire to take out.

Approximately 90% of student loan debt is made up of federal loans, with interest rates ranging from 3.73% to 6.28%.

The interest rate you pay on your private student loans is likely to differ significantly from that of a federal student loan.

Fixed rates range from 2.94% to 12.99%, while variable rates range from 0.94% to 11.98%.

The interest rates on private student loans, like those accessible to federal loan applicants, are set by the lender and the type of interest rate (fixed or variable) as well as the borrower’s credit score.

Federal Student Loan Interest Rates

TypeBorrowerFixed Interest RateFee
Direct PLUS LoansParents and graduate or professional students6.28%4.228% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2022
Direct Subsidized Loans and Direct Unsubsidized LoansUndergraduate students3.73%1.057% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2022
Direct Unsubsidized LoansGraduate or professional students5.28%1.057% for loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2022

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Private Student Loan Interest Rates

Bank and online lenders provide private student loans, so interest rates differ from one lender to the next.

If you choose a variable rate option for your private student loan, your interest rate on the loan could change over time, depending on the provider.

A few private student loan providers offer both fixed and variable rates, allowing you to choose between alternatives.

Rates on student loans are usually set using the Libor or the prime rate.

While rates are linked to this standard, private lenders also typically study your credit score, income, and financial history in order to determine your interest rate.

The lower your interest rates will be, the better your financial health and credit score.

Many lenders will conduct a hard credit inquiry to obtain this information, which can harm your credit score by a few points.

Unless you have an excellent credit score, you may typically get a sneak peek at your rates and terms just with a soft credit check.

For more information you could check Ascent rates:

Ascent Student Loans Review


  • Fixed APR: 3.97% To 11.89%
  • Variable APR: 1.47% To 9.05%
  • Minimum Credit Score: 540

Federal Student Loan Interest Rates

Congress sets the interest rates on student loans each April based on the previous 10-year Treasury note auction high yield.

New rates will apply to student loans issued between July 1 and June 30 of the next year.

The federal student loans are always fixed in rate, meaning that the interest rate will not change for the duration of the loan.

A credit check isn’t used to determine the interest rate you receive on a federal student loan.

The interest charges on a subsidized loan are different from those on an unsubsidized loan.

While in school at least half time, during your grace period and while you’re in deferment, the government will pay your interest charges for you if you have a federal loan.

The total amount you’ll be required to repay when your loan is in repayment will only include your original principle balance, as well as any fees and interest that have accrued throughout the term.

Interest charges for federal unsubsidized loans begin accruing as soon after the money is dispersed as possible.

When you make loan payments after the interest-free period has ended, the accrued student loan interest is added to your principle balance.

However, rates on federal student loans are set to zero for the duration of the coronavirus pandemic, which will last until Aug 31, 2022.

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What Influence Has the Coronavirus Had on Student Loan Interest Rates?

With the coronavirus outbreak wreaking havoc on the American economy, numerous financial products have seen interest rates drop to near-record lows.

Student loans are no different; when the Federal Reserve reduced interest rates in spring 2020, many private student loan companies lowered their rates on both fixed and variable products.

The 2020-21 and 2021-22 school years will have some of the lowest interest rates in over a decade, according to projections.

What Are the Chances of Student Loan Rates Changing In 2022?

The low student loan interest rates caused by the coronavirus are expected to endure for at least a few years.

We may ultimately observe some rates begin to rise from these depths if the economy continues along its current trajectory for at least the next several years.

Rates on government-sponsored student loans for the 2021-22 school year are greater than they were for the 2020-21 school year, although they are nevertheless low compared to pre-pandemic levels.

The Biden Administration’s Influence on Student Loans

While the president has no influence on student loan interest rates, Biden has been looking for alternative methods to make higher education more affordable for students while also reducing the necessity of student loans.

His campaign promises include free community college, discounted education at minority-serving colleges, and higher Pell Grant amounts.

He’s also been looking into options for forgiveness of past student loan debt.

However, any loan forgiveness programs are most likely only available on federally guaranteed loans.

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What Is the Best Way to Calculate Student Loan Interest?

To figure out how much interest you pay each month, follow these 3 steps:

  1. Find out what your daily interest rate is: Divide the total amount of interest you expect to earn during the year by 365.
  2. Calculate your daily interest accrual fee: Multiply your existing interest rate by the amount you still owe.
  3. Calculate your monthly payment: Multiply the daily interest earned by your billing cycle length.

Let’s assume you took out a $10,000 loan with a 5% interest rate each month.

Here’s how the process works:

  1. 0.05 (annual interest rate) / 365 = 0.000137
  2. $10,000 (principal balance) x 0.000137 = 1.37
  3. 1.37 x 30 (number of days in billing cycle) = $41.10

In this example, you’ll pay $41.10 in interest each month.

Remember that some private loans have a fluctuating interest rate, so the daily interest rate might shift with time, usually on a monthly, quarterly, or yearly basis.

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