What does a federal student loan taken out in 2026–27 cost in interest and fees?

Summary

Direct Loans first disbursed between July 1, 2026 and June 30, 2027 carry fixed rates of 6.52% for undergraduates, 8.07% for graduate and professional Unsubsidized Loans, and 9.07% for PLUS loans. On top of that, a fee of 1.057% (4.228% on PLUS) comes out of each disbursement, so you receive less than you borrow and still repay the full amount. Borrowers who were on auto pay by September 30, 2026 get a total rate cut of 1 percentage point through June 30, 2028.

Where the rates come from

Federal law sets these rates, not the Department of Education. Each year the rate equals the high yield at the last 10-year Treasury note auction before June 1, plus an add-on that depends on the loan. The May 12, 2026 auction came in at 4.468%, which produced these rates:

The law also caps them, at 8.25%, 9.50%, and 10.50% respectively. Graduate and professional PLUS loans are closed to new borrowers since July 1, 2026, so the 9.07% rate mostly lands on Parent PLUS borrowers and on students still borrowing Grad PLUS under the interim exception.

Every one of these rates is fixed for the life of the loan. A student who borrows each year ends up holding several loans at several rates, one per award year. Perkins Loans are the exception at a flat 5%, whenever they were made.

The fee comes off the top

Direct Subsidized and Unsubsidized Loans first disbursed on or after Oct. 1, 2020 and before Oct. 1, 2027 carry a 1.057% fee. PLUS loans in the same window carry 4.228%. The fee is taken out before the money reaches the school, and you owe the whole amount you borrowed.

$10,000 Direct Unsubsidized Loan fee 1.057% − $105.70 delivered $9,894.30 principal owed $10,000.00 $10,000 PLUS loan fee 4.228% − $422.80 delivered $9,577.20 principal owed $10,000.00

To land exactly $10,000 in the school's hands with a PLUS loan, you would have to borrow a little over $10,441.

The auto-pay cut, and who gets it

Servicers already take 0.25 percentage point off the rate for borrowers on auto pay. In 2026 the Department of Education added another 0.75 point, for a total of 1 point, starting July 1. Borrowers who enrolled in auto pay by September 30, 2026, or who were already enrolled, keep the lower rate through June 30, 2028, as long as they stay on auto pay.

It covers Direct Loans originated after July 1, 2012, for students and parents alike. Borrowers already enrolled did not have to do anything. Borrowers in default can get it once their loans are back in good standing.

On a $20,000 balance at 6.52%, a year of interest runs about $1,304. At 5.52% it is about $1,104, roughly $200 less, before counting the principal you pay down during the year.

Sources

Written by Kaz (pen name). Figures are copied from the sources' published pages on the dates shown. We have not used these products. Corrections: contact form.