Before considering private student loans, it’s wise to maximize your federal student aid options, including federal loans. If there’s still a gap in covering your school expenses, private student loans can be a helpful addition to your plan. In some cases, borrowers may even qualify for lower interest rates and reduced fees with private loans.
Federal Student Loan vs. Private Student Loan Interest Rate
Federal student loan rates are the same fixed rate for all borrowers regardless of credit score. These rates for federal student loans are updated yearly on July 1st.
Private student loan interest rates are competitive and based on current market trends. When borrowing a private student loan, you will be offered a fixed or variable interest rate. If you choose a loan with a variable interest rate, that variable interest rate/variable APR is subject to change throughout the life of the loan.
The loan interest rate you receive for a private student loan with depends on your credit score or that of your creditworthy cosigner. While there is no minimum credit score needed to qualify for federal student loans, private student loan applicants can be denied if their credit score does not meet the minimum standards, indicating possible bad credit and a risk for the lender.
Quickly compare federal student loan interest rates and private student loan interest rates with the tables below.
Federal Student Loans for 2025 - 2026
| Student Loan Type | Rate (Fixed APR) |
|---|---|
| Subsidized Loan | 6.39% |
| Unsubsidized Loan | 6.39% |
| PLUS Loan | 8.94% |
Private Student Loans for 2025 - 2026
| Student Loan Type | Rate (Variable APR) |
|---|---|
| Lowest In-School Student Loan Rate | 5.09% * |
*Private student loan interest rates are updated monthly
Below are some of the most competitive student loan products available.
Student Loan Origination Fees
Federal Student Loan Origination Fee
Federal student loans are all charged an origination fee. This is a percentage of the total federal student loan that the lender (in this case the federal government) charges to fund the loan. This origination fee is deducted from the total student loan amount prior to disbursement. Federal student loan origination fees are set every year on October 1 for loans disbursed from October 1 through September 30. Origination fees depend on which type of federal student loan has been approved for the student, as outlined below.
For loans disbursed from Oct. 1, 2025 to Sept. 30, 2026
Direct Subsidized or Direct Unsubsidized Loans for undergraduate students: 1.057%
Direct Unsubsidized Loans for graduate students: 1.057%
Direct PLUS (for parents, graduate students or professional students): 4.228%
Private Student Loan Origination Fee
While some private lenders might apply an origination fee to private student loans, it's more common to find options without any origination fees. The lenders featured on our website, for instance, offer private student loans completely free of origination charges. Remember, it's crucial for students and parents to thoroughly examine the specifics of their chosen student loan program. This ensures a clear understanding of any potential additional costs, such as late payment fees, that could arise during the loan's tenure.
Average Private Student Loan Interest Rate
The average interest rate on private student loans is difficult to calculate as it depends on several factors such as the loan lender, minimum credit score, private loan terms, current market trends, and length of the loan. Even with these existing variables, the lowest advertised private student loan interest rate may be lower than the fixed rate student loans offered by the federal government. But the rate you receive could also be higher than federal student loans at any specific time, depending on the current market trends and your credit worthiness. Private student loan rates may be fixed or variable and fluctuating with modern market trends. To receive the best possible student loan interest rates, it is vital to apply for your loan with a cosigner that maintains a high credit score. For a historical view of average private student loan interest rates, we break down the numbers here.
How Does Student Loan Interest Work?
How Does Federal Student Loan Interest Work?
When looking at the interest on federal loans, remember that they are not credit-based loans, which means that your eligibility for approval is not based on any minimum credit score. Federal loans have a fixed interest rate and, depending on market conditions, are commonly higher than private loan interest rates. Fixed interest rates/fixed APR gives a borrower peace of mind knowing that as time passes, their interest rates will not increase student loan payments over time.
How Does Private Student Loan Interest Work?
One of the best benefits of private student loans is that the borrower can review different lenders before making a decision and review their fixed and variable interest rate offers. When considering for applying for private student loans, make sure that you fully understand the concept of interest rates, especially variable interest rates/variable APR and the potential for the rate to increase or decrease over the life of the loan. As the market shifts, private student loan interest rates will also shift. Many applicants choose private loans because interest rates can be much lower than the fixed interest rates/fixed APR attached to federal student loans.
MORE>>>How interest is calculated on your loan
More About Private Student Loans
How Does Student Loan Interest Work
Find the Best Private Student Loans