How to Lower Your Federal Student Loan Interest Rate

Table of Contents

federal student loan interest rate

Congress sets federal student loan interest rates each year and they remain fixed for the life of the loan. They are calculated using 10 year Treasury notes plus a margin.

This formula works for undergraduate loans, graduate student loans and parent PLUS loans. In addition to the interest rate, there’s a fixed buffer of extra interest that covers deferrals, forbearance or defaults.

Interest Rates

Interest on student loans can add up quickly. Fortunately, you have the power to reduce your rates.

Congress sets federal student loan interest rates annually, and they are determined by different formulas depending on the type of loan you have. Direct Subsidized and Unsubsidized Loans typically carry lower rates while PLUS Loans cost more.

In addition to interest rates, you will also have to pay loan fees. These are charged as a percentage of your loan amount and deducted from any funds received.

Federal student loan interest rates are determined by the 10-year Treasury note and Congress caps them for different loan types. On average, federal student loan interest rates range between 4.53% for undergraduate students and 6.08% to 7.08% for graduate and professional students.


Federal student loans often feature lower interest rates than private student loan options, making them attractive to parents and graduate students. Unfortunately, federal student loans also come with fees which could add up over time.

When applying for a federal student loan, the government charges an origination fee – an amount deducted from your loan before it’s disbursed to your school. At present, this fee stands at 1.057% for undergraduate and graduate students as well as 4.228% for parents borrowing federal parent PLUS loans.

Though a fee may seem inconsequential, it can accumulate over time and reduce the total amount of money you receive. It’s essential to understand what these fees are and how they work so that you can be an informed borrower. Other fees to watch out for include late payment and returned payment fees which can accumulate quickly, costing hundreds of dollars over the life of your loan.


Federal student loans offer fixed interest rates, meaning your rate won’t change during the loan term. On the other hand, some private lenders provide variable rates that fluctuate based on market conditions and their costs.

Variable rate mortgages (VRBs) can fluctuate monthly, quarterly or annually and may also be reset at specified intervals.

There are various repayment plans for federal student loans, such as standard and graduated installments. You can select the option that best fits your budget and financial situation.

As a recent graduate, you have six months to wait before beginning payments on your federal student loan. Furthermore, you are allowed to defer making the first payment until you secure employment that pays enough to cover the full amount owed.

Borrowers can elect for the income-based repayment plan, which makes your monthly payment 10% of discretionary income and does not exceed 20% of what would normally be due under a standard repayment plan. You also have other repayment options like Revised Pay As You Earn (REPAYE), which begins with lower payments but gradually increases them according to your income.


When it comes to student loan repayment, there are various options. The federal government offers several different repayment plans such as the standard one which should be suitable for most people.

Income-driven repayment plans are also increasingly popular. These four plans take into account your annual income and family size when calculating your payment amount.

Income-driven plans offer monthly payments as low as $0, which is great news for many borrowers. However, keep in mind that any remaining balance will be taxed according to current IRS rules.

You have the option of choosing a graduated or extended repayment plan, which starts with smaller payments and gradually increases over 10 years until your loan is paid off. These options may be beneficial to federal borrowers who struggle to make their standard monthly payments; however, bear in mind that these will cost you more in interest over time. So be sure to compare the costs before making any decisions.

Low Rate Short Term Loans

If you need an urgent cash infusion, low rate short term loans could be the ideal solution. They provide fast approval and simple repayment terms. Before applying, shop around to compare rates and terms from multiple lenders. Be sure to factor in any fees that the lender charges as well. Low Interest Rates Low rate

Read More »

Mycashnow Payday Loans Review

Mycashnow is an online payday loan company that provides customers with cash advances 24/7. There’s no credit check required and they charge a low rate of interest. Mycashnow can be an ideal option for those facing financial emergencies who require help but lack the time or resources to go through traditional loan processes. Before signing

Read More »

Short Term Loans Near Me

If you’re in need of cash quickly, short term loans near me can be a great solution. But it’s essential that you select a loan with the right features. Ideally, you should look for a lender with an expeditious application process and quick funding timeline. Furthermore, avoid predatory lending sources like payday loan companies and

Read More »

Very Bad Credit Payday Loans No Guarantor Direct Lender

Bad credit payday loans offer a fast and convenient way to obtain the money you need quickly. But they come with their own risks too. These short-term loans can quickly spiral into a cycle of delinquent payments and high interest rates. It’s essential that you understand all the ins and outs before applying for one

Read More »

Cheap Same Day Loans

If you need cash quickly, same-day loans may be your best bet. Unfortunately, they tend to be more costly than other forms of borrowing. Same-day loans can be obtained through payday lenders and pawn shops, though these options may not be suitable for those with poor credit histories. 1. MoneyMutual MoneyMutual is an online marketplace

Read More »

Cash Converter Loans – What Are Cash Converter Loans?

Cash converter loans are a type of loan designed for people who require money quickly. You can use them for paying off bills, getting emergency funds or pawning your goods and valuables. The process is effortless. All that needs to be done is visit your closest Cash Converters office, where they will verify your financial

Read More »

Instant Payday Loan Lenders

Instant payday loan lenders offer convenient funding solutions and often easy applications. These loans can provide financial relief for unexpected costs, such as medical bills or car repairs. Furthermore, they help you steer clear of costly late fees and penalties. MoneyMutual MoneyMutual is a platform that connects borrowers with short-term lenders to meet their financial

Read More »

Student Loan Lenders

If you’re considering taking out student loans to finance college expenses, it is essential that you research and select the most advantageous lender. Doing this will guarantee you get competitive interest rates and terms, plus minimize any unnecessary fees. When looking for a lender, look for one that offers in-school repayment options, multiple interest rates

Read More »

How to Get Approved For House Loans For Bad Credit

Being approved for a house loan with poor credit can be daunting, but that doesn’t have to stop your aspirations of homeownership! Home loans for people with bad credit can be obtained from both government-backed lenders and private lenders. Research the options and find the one that works best for you in your individual situation.

Read More »

How to Borrow Short Term Cash

If you need short-term cash, there are plenty of options. Loans can help cover expenses like car repairs or unexpected bills. However, it’s essential to exercise caution when borrowing this type of money. These loans often come with high interest rates and fees which could put a strain on your budget. Payday Loans If you

Read More »

Home Credit Cash Loan

If you need an easy and swift way to borrow money, Home Credit Philippines offers cash loans. This lender provides various finance solutions for Filipinos including cash loans and store financing purchases. The bank has multiple branches throughout the country and offers a product loan to enable customers to purchase large-ticket items like laptops, smartphones,

Read More »

Home Loan Companies

Home loan companies play a pivotal role in the housing industry. They provide advice to borrowers on purchase loans, refinancing mortgages and home equity loans. Before selecting a lender, it’s wise to shop around and compare rates, fees and terms. Furthermore, make sure the company you’re considering is reliable with an excellent customer service record.

Read More »