Money · 2026–27 federal rates · No sign-up
How much will your loan grow before you graduate?
Unsubsidized federal loans start charging interest the day the money is paid out, not when you start repaying. See how much builds up by graduation, and what you’ll actually owe when repayment starts.
What you’ll owe
Loan by loan
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Worth knowing
This is a general estimate, not financial advice. It uses simple daily interest (how federal Direct Loans accrue) at the rate you enter, assumes you stay enrolled at least half-time until graduation, and doesn’t include any payments. Private loans work differently. Your loan servicer and studentaid.gov have your exact balances and rates.
How in-school interest works on federal loans
Federal Direct Loans charge simple interest that accrues daily on the amount you borrowed. On an unsubsidized loan it starts the day the money is paid out, keeps going through school and the six-month grace period, and any interest you haven’t paid is generally added to your balance (“capitalized”) when repayment begins. After that, you pay interest on the bigger balance.
On a subsidized loan, the government pays the interest while you’re enrolled at least half-time, during the grace period, and during approved deferments. So if you stay in school, nothing is added.
Plus the grace period = amount × rate × 0.5
Balance when repayment starts = amount + unpaid interest (unsubsidized)
2026–27 federal student loan rates
- Direct Subsidized and Unsubsidized Loans for undergraduates: 6.52%
- Direct Unsubsidized Loans for graduate and professional students: 8.07%
- Direct PLUS Loans: 9.07%
These fixed rates apply to loans first paid out between July 1, 2026 and June 30, 2027. They’re set each spring from the May 10-year Treasury auction (4.468% on May 12, 2026) plus a fixed add-on, so next year’s loans will have a different rate. Loans also carry a 1.057% origination fee, which is taken out before the money reaches you, but you owe the full amount.
Sources: Federal Student Aid, Electronic Announcement GENERAL-26-33, “Interest Rates for Federal Direct Loans First Disbursed Between July 1, 2026 and June 30, 2027” (June 4, 2026); GENERAL-26-28, FY27 sequester-required loan fee changes (May 13, 2026). Rate current as of September 30, 2026.
Common questions
Does interest build up on student loans while I’m in school?
On unsubsidized federal loans, yes, from the day each loan is paid out. On subsidized federal loans, no, as long as you’re enrolled at least half-time; the government covers the interest while you’re in school, during the six-month grace period, and during deferment. Most private student loans also charge interest while you’re in school.
What is the federal student loan interest rate for 2026–27?
6.52% for undergraduate Direct Subsidized and Unsubsidized Loans first paid out between July 1, 2026 and June 30, 2027. It’s fixed for the life of the loan. For comparison, the undergraduate rate was 6.39% for 2025–26 and 6.53% for 2024–25. Graduate unsubsidized loans are 8.07% and PLUS loans 9.07% for 2026–27.
Source: Federal Student Aid, GENERAL-26-33 (June 4, 2026).
What’s the difference between subsidized and unsubsidized loans?
Subsidized loans are for undergraduates with financial need, as determined by your school from your FAFSA, and the government pays their interest while you’re in school. Unsubsidized loans don’t require financial need and are available to undergraduate and graduate students, but interest accrues the whole time. Both have annual borrowing limits based on your year in school and dependency status.
If you’re offered both, accept the subsidized loan first.
What does “capitalized interest” mean?
It’s unpaid interest being added to your loan balance. After that, interest is charged on the new, larger balance, so you end up paying interest on interest. On unsubsidized federal loans, interest that built up during school and the grace period is generally capitalized when repayment begins. Paying it off before then keeps your balance at what you originally borrowed.
Should I pay the interest while I’m still in school?
If you can, it’s one of the cheapest ways to shrink your future debt. Payments aren’t required during school, but paying the monthly interest on an unsubsidized loan (often less than a phone bill; see the figure above) stops it from building up and being capitalized. Even occasional lump-sum payments before the grace period ends help.
Why did I get less money than the loan amount?
Federal Direct Loans have an origination fee, 1.057% for subsidized and unsubsidized loans first paid out before October 1, 2027, that’s taken out of each disbursement. On a $5,500 loan that’s about $58, so about $5,442 reaches your school account, but you owe (and pay interest on) the full $5,500.