Federal Student Loan Interest Rates for 2026–27: How the July 1 Rate Is Set

Federal Direct loans first disbursed between July 1, 2026 and June 30, 2027 carry new fixed rates: 6.52% for undergraduate loans, 8.07% for graduate/professional Direct Unsubsidized loans, and 9.07% for Direct PLUS loans, per Federal Student Aid's June 4, 2026 announcement. Each rate stays fixed for the life of the loan.

What are the new federal student loan interest rates for 2026–27?

Federal Student Aid (the U.S. Department of Education office that runs federal aid) publishes the rates each year before the July 1 start of the new loan period. The figures below come from the FSA Partners electronic announcement dated June 4, 2026 and the studentaid.gov "Interest Rates for New Direct Loans" page.

Loan type	Borrower	Fixed rate (2026–27)	Statutory cap
Direct Subsidized & Unsubsidized	Undergraduate	6.52%	8.25%
Direct Unsubsidized	Graduate/professional	8.07%	9.50%
Direct PLUS	Graduate & parents	9.07%	10.50%

"Fixed" means the rate locks when the loan is disbursed and never moves, regardless of what Treasury yields or the Fed do afterward.

How is the July 1 rate actually set?

No one chooses the rate. A formula written into federal law sets it, and two pieces go into that formula.

The first piece is the high yield of the last 10-year Treasury note auction in May. A Treasury note is a loan to the federal government; its "high yield" at auction is the highest accepted interest rate bidders pay. That single number, reported by TreasuryDirect, becomes the base for every Direct loan rate that takes effect the following July 1.

The second piece is a fixed add-on, a set number of percentage points stacked on top of that Treasury yield. Each loan type gets a different add-on:

Loan type	Add-on above 10-yr Treasury	Statutory cap
Undergraduate Direct	+2.05 points	8.25%
Graduate Direct Unsubsidized	+3.60 points	9.50%
Direct PLUS	+4.60 points	10.50%

So with the May 2026 10-year auction high yield at 4.468%, the undergraduate rate works out to 4.468% + 2.05% = 6.52%, the graduate rate to 4.468% + 3.60% = 8.07%, and PLUS to 4.468% + 4.60% = 9.07%. The result is then capped: even if the formula produced a higher number, the rate could not exceed the cap in the table.

Do these rates change my existing loans?

No. The 2026–27 rates attach only to new loans disbursed between July 1, 2026 and June 30, 2027. A federal Direct loan you already hold keeps the fixed rate it had when it was disbursed. Last year's loans carry last year's rate, and next year's auction will reset the rate again for loans disbursed after July 1, 2027. Each annual batch of loans is locked to its own number for the full repayment period.

Are there fees on top of the interest rate?

Yes. Federal Direct loans charge a one-time origination fee (also called a loan fee), deducted from each disbursement before the money reaches the school. Per studentaid.gov, for loans first disbursed on or after October 1, 2020, the fee is 1.057% on Direct Subsidized and Unsubsidized loans and 4.228% on Direct PLUS loans. A $10,000 PLUS loan, for example, disburses about $9,577 after the fee, even though the borrower repays the full $10,000 plus interest. The interest rate and the origination fee are separate costs.

How much does one rate point change a payment?

The arithmetic is the clearest way to see what a rate change does. As an illustration, take a $30,000 balance on the standard 10-year (120-month) repayment plan and compare a 6.15% rate against a 7.15% rate, one point higher.

At 6.15%, the monthly payment is about $335, and total interest over 10 years runs about $10,237. At 7.15%, the payment rises to about $351, with total interest near $12,077. That single point adds roughly $15 a month and about $1,840 in interest over the life of the loan.

The student loan calculator can show the monthly payment and total interest for other balance, rate, and term combinations.

What is the 2026–27 rate formula in one line?

The 2026–27 rate equals the May 2026 10-year Treasury auction high yield plus a statutory add-on of 2.05 points (undergrad), 3.60 points (graduate), or 4.60 points (PLUS), capped at 8.25%, 9.50%, and 10.50%. It is fixed for the life of each loan disbursed in the July 1, 2026–June 30, 2027 window, and origination fees apply on top.