Federal student loan rates rise July 1 for the 2026-27 school year

A $10,000 federal undergraduate loan taken out after July 1 will carry a 6.52% fixed rate, lifting a standard 10-year payment to about $113 a month, about 66 cents more than this year’s rate and roughly $79 more over the life of the loan. On a $20,000 Direct PLUS loan, the standard payment comes to about $254 a month before any discount, a reminder that even tiny percentage-point changes become real dollars once repayment begins.

For loans first disbursed on or after July 1, 2026 and before July 1, 2027, the Education Department set federal Direct Subsidized and Direct Unsubsidized Loans for undergraduates at 6.52%, Direct Unsubsidized Loans for graduate and professional students at 8.07%, and Direct PLUS Loans for parents and for graduate or professional students at 9.07%. The rates are tied to the 10-year Treasury auction held before June 1, and this cycle’s May 12 auction produced a 4.468% high yield. The fixed rate stays with each loan for its entire life, and the HEA ceilings are 8.25% for undergraduate subsidized and unsubsidized loans, 9.50% for graduate and professional unsubsidized loans, and 10.50% for PLUS loans.

The department also said borrowers enrolled in auto pay will get a separate 1 percentage point interest-rate reduction beginning July 1, through June 30, 2028. Borrowers who enroll by September 30, 2026, or are already enrolled, can qualify. Officials said more than 80% of borrowers in active repayment used auto pay before the pandemic, compared with about 40% today. July 1 also brings two new repayment options: the Repayment Assistance Plan and the Tiered Standard repayment plan. On a $20,000 PLUS loan, that 1-point discount would trim the monthly bill from about $254 to about $243 while the benefit lasts.

The higher rates land as college prices remain elevated. College Board says average 2025-26 published tuition and fees are $11,950 at public four-year in-state colleges, $31,880 at public four-year out-of-state colleges, $4,150 at public two-year in-district colleges and $45,000 at private nonprofit four-year colleges. It also estimates average net tuition and fees at public four-year institutions at $2,300 after inflation, down from a 2012-13 peak of $4,450, even as state and local funding per student was about flat in 2023-24 and the gap between higher- and lower-income families has widened over time.

The July 1 reset arrives alongside new borrowing caps that narrow the runway for graduate students. Beginning in July 2026, new graduate students will face a federal borrowing cap of $20,500 a year with a $100,000 aggregate limit, and new professional students will face $50,000 a year with a $200,000 aggregate limit. For families already stretched by tuition, rent and food, the change raises both the amount they can borrow and the cost of carrying that debt.