Federal student loan rates are fixed and set by a formula created by Congress that changes annually. For the 2025-2026 academic year, Direct undergraduate loans have a rate of 6.39%. Private student loan rates change more often and can be fixed or variable. Rates are based on lender preferences, personal credit and market conditions.

President Donald Trump's proposed budget bill includes a new student loan repayment plan that could significantly increase payments for some borrowers. The Student Borrower Protection Center estimates average annual payment increases of nearly $3,000 for some borrowers under the new plan.