The Average Student Loan Interest Rate (It’s Not What You Expect!)

By Aaron Sarentino Reviewed by Nima Vahdat Updated Sep 12, 2023
The Average Student Loan Interest Rate (It’s Not What You Expect!)

The average student loan interest rate is a crucial factor to consider for your future financial situation.

By understanding how to calculate the amount of money you will pay in interest for your student loans, you can make an informed decision about finances.

Unfortunately, the average student loan interest rate varies widely between lenders as well as between borrowers depending on their credit profile, loan type, and more. However, there are ways to determine what kind of rate you could expect based on your individual circumstances. 

This article will help you understand the average student loan interest rate and how to find your ideal rate for your personal situation.


  • There are three main types of federal student loans available with private lenders offering additional options.
  • Interest rates can vary between lenders and borrowers but are typically based on creditworthiness, loan type, and repayment terms.
  • Fixed interest rates may sometimes be higher than variable rates, but they provide more predictability in the long term.
  • Each person will have unique circumstances, so shop around and compare your options to find the best fit for you.

Different Types of Student Loans Available

Before determining the average student loan interest rate, it’s important to understand how different types of loans work and who is eligible for each. The federal government issues three main types of loans for college students:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Parent PLUS Loans

Average Student Loan Interest Rates for Different Types of Loans

As stated earlier, the interest rate you’ll pay on a student loan depends heavily on the type of loan you take out. Let’s explore the student loan rates and the benefits of the three different types offered by financial institutions. 

The following averages are recorded at the time of writing (9/6/2023) and are referenced from

Direct Subsidized Loans

A direct subsidized loan is typically offered with an interest rate that is lower than most other loans, as it is subsidized by the government up to a certain amount. The current interest rate for direct subsidized loans is 5.50% for undergraduate students and 6.60%. Direct subsidized loans are not available for graduate or professional students.

Direct Unsubsidized Loans

A direct unsubsidized loan is not subsidized by the government and therefore carries a higher interest rate than a subsidized loan. With the current rate of 7.05%, undergraduates, graduates and professional students can benefit from this loan type but will experience a heavier debt responsibility.

Parent PLUS Loans

Parent PLUS loans are typically offered by private lenders with a slightly higher interest rate. Although they come with an average student loan interest rate of 8.05%, Parent PLUS loans carry flexible repayment plans and allow parents to borrow up to the cost of attendance minus any other financial aid received. 

This means parents can use this loan to cover additional expenses such as supplies, transportation, and other educational needs.

Factors that Determine Your Student Loan Interest Rate

The interest rate you will be charged for your student loan can vary, depending on several factors. These include your credit score, type of loan taken out, repayment options, and other financial aid received. Taking the time to research your options can help you find the best option for your situation and help you avoid having an excessive debt burden.

With a high credit score contributing to a lower average student loan interest rate, it can be a thoughtful financial decision to start building a strong credit score early in a young adult’s life. That way, when the time comes to take out a student loan, they can get the best rate possible and save hundreds or thousands in interest payments over the lifetime of their loan.

Fixed-rate student loans also tend to have lower rates than the variable-rate options. With a fixed rate, borrowers know that their monthly payments will remain consistent for the life of the loan; however, variable-rate loans can be more unpredictable because they come with interest rates that vary over time. Private lenders may engage in offering variable-rate loans which means borrowers should be prepared to potentially face higher interest rates.

To calculate the interest amount, multiply the outstanding principal balance by the interest rate and then multiply it by the number of days since the last payment. For example, if your total principal was $40,114 (The average debt per student), and you were to receive direct subsidized loans for 5.50%, with a repayment schedule of $350 per month, it would take you 13 years and 7 months with $16,913.15 of total interest paid. Many variables can affect the total amount of interest you’ll pay, such as missed payments, different repayment terms, etc.

How To Determine The Best Option For Your Needs

Now that you have a better understanding of the average student loan rates according to type and the factors behind them, you can begin to take steps toward determining the right option for your needs. Consider the timeline of when you plan to pay off the loan and review what type of repayment options are available. This becomes a personal decision as your post-education career and income may dictate how quickly you want to pay off the loan.

For example, if you plan on taking some time off to celebrate your educational success or travel for a bit, then you may decide to opt for an extended-term loan, which will mean lower payments each month and more time to pay off the debt. This may result in a larger total interest payment over time; however, it may be the right decision for you if you’d like to lower the pressure of a larger monthly payment.

By using a student loan debt calculator and understanding the average starting salaries for each career, you can begin to estimate where your budget will be for loan payments. Take time now to research student loan rates and find the best option for you. Doing this in advance will help you better understand your financial obligations once you graduate and have more peace of mind as you begin your post-education life.

If you feel like you are entering into a debt spiral later on in life, debt consolidation may be the right option for you. Consolidating certain types of student loan debt with a lower-interest rate loan can help you combine multiple loans into one manageable payment each month, as well as potentially reduce your overall interest payments over time.

Depending on how much debt you owe, you may want to consider seeking debt relief. Americor has provided over $2 billion in debt relief to over 200,000 clients, and could help provide you with the debt relief you need. 

For more information on Americor’s debt relief services, contact us today to see how we can help you get on the fast-track to becoming completely debt-free!



Aaron Sarentino

Aaron oversees executive, administrative and management functions for the firm. Aaron has a Bachelors in Business Administration from Pepperdine University. He is responsible for helping customers at every stage of the debt settlement process and focused on building loyalty to ensure long-term client retention by addressing customer issues. Aaron plays a pivotal role in the upliftment of the Americor team to ensure the best possible customer experience for clients.