Best & Average Student Loan Interest Rates | Guide | Finding Top Interest Rates on Student Loans

Guide: Finding the Best, Top and Average Student Loan Interest Rates

Around 44 million Americans currently have student loan debt. This means that student loans affect a wide variety of people. In order to pay back all that debt without completely breaking the bank, it is important to find the best student loan interest rates.

The problem that many people run into is in not knowing where to start. If you are unsure over the current average student loan interest rate, how will you know whether or not you have actually found the best student loan interest rate for you and your education?

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This guide on student loan interest rates will do just that. We will take a look at the average student loan interest rates for:

Federal student loans
Private student loans (fixed and variable)

Then, we will use the estimated information regarding the average interest rate on student loans as a tool for navigating through the process of finding the best interest rates on student loans. Finally, we will show you resources to simplify the research you do on top student loan interest rates.

Factors Affecting the Average Interest Rate on Student Loans

There is no one size fits all when it comes to a student loan interest rate or even the average interest rate on student loans. Many factors go into determining how much interest you will be paying on your loan. Beyond your loan amount and term length, some other factors that influence the interest rates for student loans include:

Federal vs. private student loans: Receiving student loans from the government or receiving them from a lender means different rules and different student loan interest rates.

Fixed vs. variable private student loans: When you choose a private loan from a lender, the interest rate on student loans can change dramatically whether you choose a fixed rate or variable rate.

Credit history: For private student loan interest rates, your interest (or annual percentage rate) will depend upon your credit history or lack thereof.

The government: Of course, for a federal student loan interest rate, the government determines that percentage. However, legislation it passes can also alter private student loans.

These factors mean that, while we can estimate an average student loan interest rate and even suggest the best ways to get great interest rates for student loans, this is not an exact science.

Federal vs. Private Student Loans

In order to fully understand the average interest rate on student loans, it is important to realize the differences between federal student loans and private student loans.

The student loan interest rate on each federal loan is determined by the government. Before each school year, the current interest rates are clearly displayed. There are only a few federal student loan options, and they do not change much.

The student loan interest rate on each private loan, however, can vary wildly. Each lender determines the rates, and there are quite a few lenders to choose from.

We will take a closer look at each type individually – federal and private – to give you a better idea of what to expect to pay for the average student loan interest rate.

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Federal Student Loan Interest Rate: 2017 Roundup

When it comes to learning the average student loan interest rates, the easiest place to start is with federal student loan interest rate lists. The chart below shows the current federal student loan interest rate schedule that began in 2016 and will lead into 2017.

Type of Federal Student Loan	Federal Student Loan Interest Rate 2016–2017
Direct subsidized loan (undergraduate)	3.76%
Direct unsubsidized loan (undergraduate)	3.76%
Direct unsubsidized loan (graduate)	5.31%
Direct PLUS Loan (graduates or parents)	6.31%

These are considerably lower than the average student loan interest rate on federal loans for the year before (2015/2016). At that time, direct subsidized and unsubsidized loans for undergraduates were at 4.29%, direct unsubsidized loans for graduates at 5.84%, and PLUS Loans at 6.84%.

Average Student Loan Interest Rate for Federal Loans

The average federal student loan interest rate for an undergraduate in 2017 is 3.76%, and the average federal student loan interest rate for graduates in 2017 is 5.81%.

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Private Student Loan Interest Rates: Fixed Averages

Since countless companies offer private student loans – some at fixed interest rates, some at variable interest rates – it is much more complicated to nail down an average student loan interest rate on private loans.

Let’s start with fixed-rate private student loans. With these, you start out with one student loan interest rate and keep it for the life of you loan. Interest rates for student loans that are fixed tend to start a little higher since they are giving you security in return.

To give you an idea of what to expect, we gathered two lists: one offered by NerdWallet and the other by LendEDU. Both of these lists offered the ranges of interest rates for these loans. Here is what we found (keep in mind that these are not necessarily the highest or lowest rates you will ever find but simply offer you a general idea):

The lowest private student loan interest rates mentioned came from RISLA, at 3.99%, for the bottom side of a fixed loan.

The highest private student loan interest rates mentioned came from Wells Fargo, at 12.99%, for the top side of a fixed loan.

Private Student Loan Interest Rates: Variable Averages

Now, let’s move over to interest rates for student loans that are both private and variable. The interest rates on student loans that are variable can shift throughout the life of the loan. The incentive, then, is that the ranges are typically a bit lower than fixed loans.

We looked at the same two lists of private loan options to find the following statistics on the variable options (keep in mind that these are not necessarily the highest or lowest rates you will ever find but simply offer you a general idea):

The lowest private student loan interest rates mentioned came from College Ave, at 2.20%, for the bottom side of a variable loan.

The highest private student loan interest rates mentioned came from Sallie Mae, at 11.89%, for the top side of a variable loan.

Average Student Loan Interest Rate for Private Loans

Private student loan interest rates, both fixed and variable, range from 2% to 12%. Yet many of these loans sit lower than that 12%. We estimate, then, that the average interest rate on student loans from a lender is approximately 5% to 7%.

What Is the Average Interest Rate on Student Loans?

Now that we have looked at federal student loan interest rate charts and the interest rate for student loans through private lenders (for both fixed and variable), we can make educated guesses on the average student loan interest rate in general.

Our above calculations show that you should expect to pay around 3.76% to 7% on a student loan. However, looking back to our section on factors that affect interest rates for student loans, know that you could absolutely get a lower percentage or a higher one.

This means that we should now focus on helping you find the top student loan interest rates you possibly can.

Finding the Best Student Loan Interest Rates

With the general average student loan interest rate in mind, it is considerably easier to begin looking for the best student loan interest rates you can find for yourself. You know the range to expect your student loan interest rate to fall into.

When it comes to paying off thousands of dollars in student debt, even one percentage point can make a difference, so it is important to take the time and really research your options.

The first three following sections are lists of helpful resources you can use to research and ultimately find the best student loan interest rate for your education. Finally, we will look at two options you have to get lower student loan interest rates: cosigning and refinancing.

Student Loan Lenders

Federal: Federal Student Aid

When it comes to finding the best interest rate on student loan offerings from the government, there is one main tool. The Office of the U.S. Department of Education supplies full information about federal student loans on its Federal Student Aid website. Here, you can:

See what types of aid are available
Learn how much money you can borrow for your federal student loans
Read about the process of getting and paying back federal loans
Research more about the federal student loan interest rate you could potentially pay
Apply for aid and/or federal student loans

Private: NerdWallet

When it comes to finding the best interest rate on student loan offerings from private lenders, we have two resources for you. The first is NerdWallet’s list of “9 Best Private Student Loan Options,” which lists its favorite lenders for private student loans. The article clearly shows:

The average interest rate on student loans from each lender
The eligibility requirements
The borrower protections
Your next step

Private: LendEDU

Our second resource for finding the top student loan interest rates on private loans is LendEDU’s list of top student loan lenders. This list highlights four lending companies and offers you the following information:

Range of average student loan interest rates from each lender
Loan types available
Term lengths available
Options to learn more about each lender and apply

Note on Cosigning for Student Loan Interest Rates

Sometimes, a lender will not be confident in a young student’s credit history to offer a good student loan interest rate – or to even offer one at all. A parent could potentially cosign to in order to make that student loan happen.

Keep in mind that, when you cosign, the responsibility for that loan will be entirely on your shoulders if your student ends up not paying. This means, if you do choose to cosign, finding the best student loan interest rates is entirely pertinent to you as well.

Note on Refinancing Your Student Loan Interest Rate

Up until now, we have focused on getting a good interest rate on student loans. Now, we will look at how to get a better interest rate for student loans you already have. If you get locked into interest rates on student loans that make you entirely unhappy, there are options to refinance these loans.

Say you end up with a student loan that is way above the average interest rate on student loans; there will be an opportunity in the future to get an even better rate simply by refinancing. Keep this in the back of your mind as an option.

The Right Interest Rate on Student Loans for You

Ultimately, you will want to use all this information on average student loan interest rate ranges and how to find great student loan interest rates to make sure you get the best deal possible.

Take the knowledge of knowing what to expect from the average interest rate on student loans, and use it to navigate through your search process. Make the decision between federal and private student loans. Choose between a fixed or variable private loan. Compare potential private lenders. Consider a cosigner or refinancing options.

Eventually, you will find the top interest rate for student loans that will best serve you and your education without breaking your wallet for the next few years.

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