Federal Student Loan Interest Rates 2026-27: New Stafford and Parent PLUS Rates Effective July 1

Each year, the federal student loan interest rate is set by the high yield of the 10-year Treasury note auction held in May. The May 12, 2026 auction produced a high yield of 4.468%. Layering the statutory add-ons specified in the Higher Education Act on top of that yield produces the rates that apply to new federal student loans first disbursed between July 1, 2026 and June 30, 2027. The Department of Education will publish the formal Annual Notice of Interest Rates in the Federal Register in the coming weeks, but the math is fixed by the auction result.

This is the second consecutive year of relatively modest movement in federal loan rates after the larger jumps in 2022 and 2023. None of the rates this year hit their statutory caps, so all rate categories moved together with the underlying Treasury yield.

The New 2026-27 Rates at a Glance

All rates are fixed for the life of the loan. There are no variable-rate options in the federal student loan program. The Direct PLUS rate is the same statutory rate for both Parent PLUS and Grad PLUS borrowers, but the RISE final rule eliminates new Grad PLUS disbursements for borrowers who did not have an outstanding Grad PLUS loan as of June 30, 2026. In practice, the 9.07% PLUS rate for 2026-27 mostly applies to Parent PLUS.

How the Rates Are Calculated

Federal student loan rates are not set by the Department of Education at its discretion. The formula is written into the Higher Education Act (20 U.S.C. 1087e) and runs automatically each May:

• Undergraduate Direct Subsidized / Unsubsidized: May 10-year Treasury high yield + 2.05%, capped at 8.25%.
• Graduate Direct Unsubsidized: May 10-year Treasury high yield + 3.60%, capped at 9.50%.
• Direct PLUS (Parent / Grad): May 10-year Treasury high yield + 4.60%, capped at 10.50%.

The May 12, 2026 auction's high yield was 4.468%. Plugging that into the formula:

• 4.468% + 2.05% = 6.518%, rounded to 6.52% for undergraduates.
• 4.468% + 3.60% = 8.068%, rounded to 8.07% for graduate students.
• 4.468% + 4.60% = 9.068%, rounded to 9.07% for Direct PLUS.

Because the formula is rule-based, every year's rate is essentially a referendum on the 10-year Treasury yield in mid-May. When yields drop, rates drop; when yields rise, rates rise. The 13-basis-point increase for 2026-27 reflects a similar 13-basis-point uptick in the underlying Treasury yield between the May 2025 and May 2026 auctions.

What the Increase Actually Costs in Dollars

Headline rate increases sound dramatic, but the dollar impact depends on how much you borrow and how long you take to repay. Here are realistic scenarios under standard 10-year amortization:

Undergraduate: $5,500 first-year Direct Unsubsidized

The standard first-year dependent undergraduate Direct Unsubsidized cap is $5,500. At 6.52%, monthly payment over 10 years is about $62.42 and total interest is roughly $1,991. At the 2025-26 rate of 6.392%, the same loan would cost about $1,952 in total interest. The 13-basis-point increase translates to roughly $39 of extra interest over the full 10-year repayment term, or about $0.33 per month.

Graduate: $20,500 annual Direct Unsubsidized

The new graduate annual cap (down from the old $20,500 + Grad PLUS for cost-of-attendance under the RISE rule) is $20,500. At 8.07%, monthly payment over 10 years is about $249 and total interest is approximately $9,328. At 7.94%, total interest would be about $9,165. The increase costs about $163 over 10 years on a single year's borrowing. A graduate student who borrows the full $20,500 each year for two years and consolidates at 8.07% pays roughly $326 more in interest than they would have at 7.94%.

Parent PLUS: $20,000 per student per year

Parent PLUS at the new 9.07% rate is the steepest federal borrowing option in the lineup, and that is before the 4.228% origination fee is layered on. A $20,000 Parent PLUS loan disburses about $19,154 net of the fee but you owe interest on the full $20,000. At 9.07% over 10 years, monthly payment is about $254 and total interest is roughly $10,506. Compared with the 2025-26 rate of 8.94%, the increase adds about $155 of extra interest per $20,000 borrowed. A parent borrowing the full new $20,000 per year cap for four years and repaying over the standard 10-year term pays about $620 more in interest at 9.07% than they would have at 8.94%.

Use our Payoff Calculator to model your own balance and rate combinations, or our College Cost Comparator to weigh borrowing across multiple school choices using the new 2026-27 rate.

Origination Fees: The Quiet Extra Cost

For loans first disbursed on or after October 1, 2020, the Department of Education charges a one-time origination fee that is deducted directly from each disbursement before the funds reach your school. The 2026-27 fees are unchanged from prior years:

• Direct Subsidized / Unsubsidized: 1.057% of the disbursed amount.
• Direct PLUS (Parent or Grad): 4.228% of the disbursed amount.

For Parent PLUS, the 4.228% origination fee is meaningful. Borrow $20,000 and you only receive $19,154 of usable funds, but interest accrues on the full $20,000 from day one. Functionally, the origination fee adds about 80 basis points to the effective interest rate on a 10-year payoff schedule. Combine the 9.07% stated rate with the origination fee and your true cost of capital for Parent PLUS is closer to 9.85% on an apples-to-apples comparison with a private loan that has no origination fee.

What Stays the Same: Existing Loans Are Locked

The single most important thing to understand about federal student loan rates is that they are fixed for the life of the loan. When a new rate is announced for the upcoming school year, it does not apply retroactively to any loan that has already been disbursed. Your 2024-25 loans keep their 2024-25 rate. Your 2025-26 loans keep their 2025-26 rate. The 2026-27 rates only apply to loans you receive a first disbursement on between July 1, 2026 and June 30, 2027.

This is different from variable-rate private student loans, where the rate adjusts periodically over the life of the loan based on a benchmark like SOFR or Prime. The federal program has no variable-rate option. Once your federal loan is disbursed, the rate is set in stone and cannot rise or fall.

One consequence: borrowers with a portfolio of federal loans usually carry a mix of rates because they borrowed across multiple award years. The Payoff Calculator can help you model the avalanche-vs-snowball question across loans at different rates.

Should You Try to Borrow Before July 1?

For most fall 2026 students, the answer is no. The rate is determined by the first disbursement date on each loan, not the loan-application date or the financial-aid-award date. Schools generally disburse Direct Loans aligned with the start of each academic term, which for fall 2026 means roughly mid-August to early September depending on the institution's academic calendar. Even if you complete your FAFSA and Master Promissory Note in June, the first disbursement will not arrive until the fall term begins.

In a few narrow cases, an early disbursement is possible — typically when a student is enrolled in a summer session or a year-round program. Asking the financial aid office whether your school can disburse before July 1 is reasonable if you have a specific use case, but the dollar value of the rate difference is small. As shown above, $39 over 10 years on a $5,500 first-year undergraduate loan is not a strong argument for restructuring your enrollment plans.

The bigger pre-July-1 deadlines this year are not about interest rates. They are about the structural changes in the RISE final rule: Parent PLUS borrowers facing the new $20,000-per-year and $65,000-lifetime caps, graduate borrowers facing the loss of Grad PLUS for new applicants, and SAVE borrowers facing servicer notices to switch repayment plans. For an overview of those deadlines, see our RISE final rule explainer, Grad PLUS phase-out guide, and Parent PLUS consolidation deadline guide.

How the New Rates Interact with RAP and Tiered Standard

July 1, 2026 is also the launch date for the two new repayment plans created by the Working Families Tax Cuts Act: the Repayment Assistance Plan (RAP) and the Tiered Standard Plan. Both will be available to borrowers with 2026-27 loans on day one, and the new interest rates interact with each plan differently.

RAP: Rate Affects Total Interest, Not Monthly Payment

Under RAP, your monthly payment is based on income (1% to 10% of AGI with a $10 minimum), not on your loan balance or interest rate. So the new 6.52% / 8.07% / 9.07% rates do not directly affect what you pay each month. They do affect two things:

• Total interest paid over 30 years to forgiveness. A higher rate means more total interest accrues, even though your monthly payment stays the same.
• The size of the government's interest subsidy. RAP's headline borrower protection is that the government covers any interest that accrues beyond what your scheduled monthly payment covers, so borrowers whose income-based payment falls below standard amortization will see the Treasury absorb a slightly larger interest subsidy at the new rate. From the borrower's perspective, this is a wash — you do not pay more — but it does mean the program is marginally more expensive for taxpayers at higher base rates.

For a complete walkthrough of RAP mechanics, see our RAP complete guide or model your specific situation with the RAP Calculator.

Tiered Standard: Rate Drives the Monthly Payment Directly

Tiered Standard works the opposite way. Your repayment term (10, 15, 20, or 25 years) is set by total balance, and the monthly payment is a straight amortization of that balance at your interest rate over that term. A higher rate means a higher monthly payment. On a $35,000 Tiered Standard loan in the 20-year tier, the difference between 6.392% and 6.52% works out to about $2 per month or roughly $480 over the full term. On a $100,000 graduate Tiered Standard loan in the 25-year tier at the new 8.07% graduate rate, the monthly payment is approximately $779.

See our Tiered Standard Plan guide for term tiers and worked examples, or use the Plan Comparison Tool to compare RAP and Tiered Standard side by side at the new rates.

Refinancing Considerations at the New Rates

Refinancing federal loans into a private loan is always a trade-off: you give up federal borrower protections (income-driven plans, PSLF eligibility, deferment and forbearance options, RAP's interest subsidy, and the ability to switch plans if your circumstances change) in exchange for a potentially lower rate or shorter term. The new 2026-27 rates do not change the structure of that trade, but they do shift the math slightly.

At 6.52% for undergraduate borrowers, private refinancing rates would need to be meaningfully lower than 6.52% (typically 4.5% to 5.5% on a fixed-rate refinance with strong credit and a co-signer) to make the math work after accounting for the loss of federal protections. At 9.07% for Parent PLUS borrowers, the spread to private rates is wider and refinancing is more often a clear win for parents who have stable high income, a strong credit score, and no need for PSLF eligibility (parents are not eligible for PSLF on Parent PLUS loans anyway, which removes one of the major arguments against refinancing for that population).

For a longer walkthrough of when refinancing makes sense, see our refinance vs income-driven repayment guide.

A Note on the 13-Year Trend

It is easy to focus on the year-over-year change and miss the longer arc. The 6.52% undergraduate rate for 2026-27 is the second-highest in the 13-year history of the variable-Treasury-yield formula, behind only the 6.53% rate for 2024-25. For most of the 2010s, undergraduate Direct Loan rates were between 3.4% and 5.05%. The rate has been above 5% for every year since 2022-23 and shows no signs of returning to the post-recession lows of the mid-2010s as long as 10-year Treasury yields stay in the 4% to 5% range.

For borrowers and parents who finished borrowing before 2022, the comparison is sobering: a graduate student borrowing $100,000 today at the new 8.07% rate would pay about $46,000 more in interest over a standard 10-year repayment than they would have on the 4.30% rate that prevailed in 2016-17. The Department of Education does not have authority to alter the formula; only Congress can change the statutory margin above the Treasury yield.

Bottom Line

The 2026-27 federal student loan rates are higher but not dramatically so. The 13-basis-point increase across all rate categories translates to small dollar amounts on individual loans and is unlikely to change the borrowing calculus for most students. The two rate categories where the dollar impact is meaningful are graduate borrowers maxing out the new $20,500 annual cap and Parent PLUS borrowers at the new 9.07% rate with the 4.228% origination fee layered on top.

The more important July 1 deadlines this year are structural: SAVE borrowers getting servicer notices to switch plans, Grad PLUS closing to new applicants, the new Parent PLUS lifetime cap of $65,000, and the launch of RAP and Tiered Standard for new disbursements. Use our RAP Calculator and Plan Comparison Tool to model your specific situation at the new rates, and our SAVE Transition Guide if you are one of the 7.5 million borrowers still in the SAVE plan as the July 1 servicer-notice rollout approaches.

This article is for informational purposes only and is not legal or financial advice. The 2026-27 federal student loan interest rates are derived from the May 12, 2026 10-year Treasury note auction's high yield of 4.468% plus the statutory margins set by 20 U.S.C. 1087e. The Department of Education's formal Annual Notice of Interest Rates will be published in the Federal Register following standard agency procedure. Origination fee figures (1.057% for Direct Subsidized/Unsubsidized and 4.228% for Direct PLUS) reflect the post-October-1-2020 rates and are subject to congressional action. Data current as of May 18, 2026.