2026 Federal Rates Updated

Student Loan Calculator

Calculate your monthly payments and see how different loan terms affect your total cost.

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2025-2026 Federal Student Loan Rates

5.50%
Direct Subsidized
Undergraduate
7.05%
Direct Unsubsidized
Graduate
8.05%
Direct PLUS
Parents/Graduate

Understanding Student Loans: Complete Guide

Student loans are a form of financial aid that must be repaid with interest, unlike grants and scholarships which are free money. In 2025-2026, approximately 43 million Americans carry student loan debt totaling over $1.7 trillion, making it the second-largest category of consumer debt after mortgages.

The average student loan debt for bachelor's degree graduates is approximately $37,000, though this varies significantly based on the type of institution attended. Graduate and professional students often carry substantially higher debt, with law school graduates averaging $145,000 and medical school graduates averaging $200,000.

When evaluating whether to borrow, consider the salary in your intended career field. Financial experts recommend that your total student loan debt should not exceed your expected first-year salary after graduation.

Federal vs Private Student Loans

✅ Federal Loans

  • • Fixed interest rates (won't change)
  • • No credit check for most undergrad loans
  • • Income-driven repayment options
  • • Deferment & forbearance available
  • • Loan forgiveness programs (PSLF, IDR)
  • • Death/disability discharge
  • • No prepayment penalties

⚠️ Private Loans

  • • Variable or fixed rates
  • • Requires credit check (often cosigner)
  • • Fewer repayment options
  • • Limited hardship options
  • • No federal forgiveness programs
  • • May have prepayment penalties
  • • Consider only after maxing federal

Federal Student Loan Types & Rates (2025-26)

Loan TypeInterest RateBorrowerAnnual Limit
Direct Subsidized6.53%Undergrad w/need$3,500-$5,500
Direct Unsub (Undergrad)6.53%Undergrad$5,500-$12,500
Direct Unsub (Graduate)8.08%Graduate$20,500
Direct PLUS9.08%Parents/GradCost of attendance

Student Loan Repayment Plan Options

Standard (10 Years)

Payment:
Fixed
Forgiveness:
No
Best for:
Lowest total cost

Graduated

Payment:
Starts low, increases
Forgiveness:
No
Best for:
New graduates

Extended (25 Years)

Payment:
Lower monthly
Forgiveness:
No
Best for:
$30K+ debt

SAVE Plan

Payment:
5-10% income
Forgiveness:
20-25 yrs
Best for:
Lower income

PAYE

Payment:
10% income
Forgiveness:
20 yrs
Best for:
High debt/low income

IBR

Payment:
10-15% income
Forgiveness:
20-25 yrs
Best for:
All borrowers

Student Loan Forgiveness Programs

Public Service Loan Forgiveness (PSLF)

Forgives remaining balance after 120 payments while working for government or nonprofit.

120 paymentsGov/Nonprofit employerTax-free

Income-Driven Repayment Forgiveness

Remaining balance forgiven after 20-25 years of payments on IDR plan.

20 yrs (undergrad)25 yrs (grad)May be taxable

Teacher Loan Forgiveness

Up to $17,500 forgiven after 5 years teaching in low-income schools.

5 years$17,500 STEM/Special Ed$5,000 Other

How to Pay Off Student Loans Faster

1

Make Extra Payments

$100/month extra on $50K loan saves $8,400+ in interest

2

Debt Avalanche

Pay highest rate loans first, then move down

3

Bi-Weekly Payments

26 half-payments = 13 full payments per year

4

Apply Windfalls

Tax refunds, bonuses directly to principal

5

Autopay Discount

0.25% rate reduction from most servicers

6

Employer Benefits

Some employers offer $100-$400/month repayment

Frequently Asked Questions (30)

What is the current federal student loan interest rate?
For 2025-2026, the rate is 6.53% for undergraduate Direct Loans, 8.08% for graduate loans, and 9.08% for PLUS Loans. These rates are fixed for the life of the loan.
How do I calculate my student loan payment?
Multiply your loan balance by 0.0114 for 10-year plan at 6.53%. Example: $40,000 × 0.0114 = $456/month. Use a calculator for different terms.
What is the average student loan debt?
Average is ~$37,000 for bachelor's degrees. 30% graduate debt-free; 10% exceed $60,000. Law/med school: $145K-$200K.
What's the difference between subsidized and unsubsidized loans?
Subsidized: government pays interest while in school. Unsubsidized: interest accrues from disbursement. Both have same rate.
What is income-driven repayment?
IDR caps payments at 10-20% of income. After 20-25 years, remaining balance is forgiven. Includes SAVE, PAYE, IBR, ICR plans.
What is Public Service Loan Forgiveness?
PSLF forgives balance after 120 payments while working for government/nonprofit. Must be on IDR plan with Direct Loans. Tax-free.
Can I pay off student loans early?
Yes! Federal loans have no prepayment penalties. Extra payments reduce interest. Specify extra goes to principal.
What happens if I can't afford payments?
Contact servicer immediately. Options: switch to IDR (can be $0/month), request deferment or forbearance. Never just stop paying.
What is student loan refinancing?
Refinancing replaces loans with new private loan at lower rate. Warning: loses federal protections like IDR and PSLF.
What credit score to refinance?
Most need 650-680 minimum, 720+ for best rates. May need cosigner if insufficient credit or income.
Are loans forgiven after 20 years?
Yes, under IDR plans. 20 years for undergrad only, 25 for graduate. Forgiven amount may be taxable (except PSLF).
What is the grace period?
6 months after graduation before payments due. Interest accrues on unsubsidized and PLUS loans during this time.
How do loans affect credit score?
On-time payments help. Late payments hurt (reported after 90 days). Default: 7 years on credit report, score drops 100+ points.
What is loan consolidation?
Combines multiple federal loans into one with weighted average rate. Simplifies payments. Different from refinancing—stays federal.
What's the difference between deferment and forbearance?
Both pause payments. Deferment: subsidized interest may not accrue. Forbearance: interest always accrues. Use sparingly.
Are student loan interest payments tax deductible?
Yes, up to $2,500/year. Phases out above $75K (single) or $155K (married). Don't need to itemize.
What is a Parent PLUS loan?
Federal loan parents borrow for child's education. Highest rate (9.08%). Parent legally responsible, not student.
Can Parent PLUS loans be forgiven?
Can qualify for PSLF if parent works for qualifying employer. Must consolidate then enter ICR. IDR forgiveness also available after 25 years.
What happens to loans when you die?
Federal loans discharged upon death. For Parent PLUS, discharged if parent OR student dies. Private varies by lender.
Should I use savings to pay loans?
Keep 3-6 months emergency fund first. If loan rate is 8%+, some savings paydown may be worthwhile. Never drain savings completely.
How long to pay off loans?
Standard: 10 years. Average actual: 20 years. Extended: 25 years. With extra payments: 5-7 years possible.
What is the SAVE plan?
Replaced REPAYE. Calculates at 5% income (undergrad) or 10% (grad). Doesn't capitalize unpaid interest. Forgiveness after 20-25 years.
Can I change repayment plans?
Yes, anytime through servicer or StudentAid.gov. Takes 2-3 weeks. IDR requires annual income recertification.
What is capitalization?
When unpaid interest adds to principal, causing interest on interest. Happens after grace, deferment, forbearance. SAVE plan protects against this.
How do I qualify for forgiveness?
PSLF: 120 payments + public service. IDR: 20-25 years. Teacher: 5 years low-income school = up to $17,500. Disability discharge also available.
Is forgiveness taxable?
PSLF: tax-free permanently. IDR: tax-free through 2025 (may change). Teacher and disability: tax-free.
Subsidized vs unsubsidized: which first?
Pay unsubsidized first—interest is accruing. Subsidized loans have interest covered while in school.
Should I pay loans or invest?
Get employer 401k match first (free money). Then high-rate debt. Then balance: if loan rate < expected returns, invest more.
What if I made a mistake on application?
Contact school's financial aid office immediately. Submit FAFSA corrections. Provide documentation. Act fast—disbursement may delay.
Private loan vs federal: which to pay first?
Generally private first—they have fewer protections and often higher rates. Federal has more flexibility if you hit hardship.

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Data Sources & Citations

  1. [1] Federal Student Aid - Interest Rates 2025-26
  2. [2] Federal Student Aid - Income-Driven Repayment Plans
  3. [3] Federal Student Aid - SAVE Plan
  4. [4] Federal Student Aid - PSLF
  5. [5] Education Data Initiative - Debt Statistics
  6. [6] CFPB - Student Loan Resources
  7. [7] IRS - Student Loan Interest Deduction
  8. [8] Federal Student Aid - Default Information
IPEDS Data
Official government data
SSL Secured
Bank-level encryption
Updated 2026
Current academic year

Data sourced from U.S. Department of Education IPEDS

⚠️ Financial Disclaimer: This content is for educational purposes only and does not constitute financial, legal, or investment advice. Tuition rates and loan terms are subject to change. Always verify information with official sources and consult licensed professionals before making financial decisions.

📊 Data Sources: U.S. Department of Education (IPEDS), official university websites. Last verified: January 2026.