Best Student Loan Rates of January 2025
Updated December 27, 2024 at 3:00 am
If you have to borrow student loans for college, finding a low interest rate is key. The lower your rate, the less you’ll pay in interest charges over the life of your loans.
Federal student loan interest rates are fixed by Congress on an annual basis, so the rate you get depends on when you borrow. Private student loan rates are more variable, though, so it’s worth shopping around with multiple lenders to find a good deal.
To help you find your best offer, we’ve gathered the best rates for student loans available today. Read on for our top picks.
Our Methodology Newsweek Vault’s loan experts evaluated multiple data points to help our readers make sense of their borrowing options across student loans and personal loans. To narrow down the best available offers, we weigh the product pros and cons across five core categories, including:
- Application process
- Eligibility requirements
- Interest rates
- Loan amounts (minimum and maximum)
- Repayment flexibility
Key Takeaways Vault’s Viewpoint on Federal and Private Student Loan Rates
- Federal student loans offer fixed interest rates and valuable borrower protections for students, like income-driven repayment plans and the possibility of outright loan forgiveness.
- Private student loans can help fill funding gaps for your academic journey, assisting in comprehensively paying for your academia—but interest rates can vary greatly based on your credit.
- Remember, interest rates vary by loan type and credit history, so ensure you research all of your possible options.
- Federal and private student loans vary significantly when it comes to flexibility and repayment options—ensure you pick the loans that work for you.
Our Picks for the Best Student Loan Rates
1. Ascent
Best for Unique Loan Options
2. ELFI
Best for Students with a Co-Signer
3. Earnest Student Loan
Best for Rate Matching
4. SoFi Student Loan
Best for No Fees
5. MPOWER Financing
Best for International Students
6. College Ave Student Loans
Best for Part-Time Students
7. Funding U Student Loans
Best for No Co-Signer
8. LendKey Student Loans
Best Platform for Searching Low Rates
9. Sallie Mae
Best for Fast Co-Signer Release
10. Citizens Bank
Best for Private Student Loans
11. RISLA
Best for Nursing Students
Compare Student Loan Rates Now
1. Ascent
Best for Unique Loan Options
on Credible’s website
Why It’s An Ideal Match For Students
Ascent has student loans for undergraduate, graduate, and even international and DACA students. On top of co-signed loans, Ascent also offers non-cosigned loans for eligible students even if they don’t have established credit.
Read our Ascent student loans review.
Pros and Cons
- Competitive variable interest rates
- Borrow up to 100% of your educational expenses
- Co-signer release available after just 12 months
- Outcomes-based loans only offered to juniors and seniors with at least a 3.0 GPA
- Lowest variable APR is reserved for co-signed loans
- Non-cosigned loans have capped loan amounts
2. ELFI
Best for Students with a Co-Signer
Vault Verified
Why It’s An Ideal Match For Students
ELFI offers student loans from $1,000 with competitive starting variable- and fixed-rates. You can make interest-only payments while in school to lower your total borrowing costs. However, you’ll need to apply with a co-signer if you have minimal credit history and income. The lender’s minimum credit score requirement is 680, and you need an annual income of at least $35,000 to qualify. Read our ELFI student loans review.
Pros and Cons
- Borrow up to your school’s cost of attendance
- Possible economic hardship forbearance of up to 12 months
- No origination fees
- Late fees
- Maximum rate not disclosed
- You or a cosigner must earn at least $35,000 a year
3. Earnest Student Loan
Best for Rate Matching
Vault Verified
Why It’s An Ideal Match For Students
While Earnest offers its own low interest rates, the company also has a rate match guarantee; if you find a lower rate elsewhere on the same loan terms, Earnest will match it and give you a $100 Amazon gift card for the trouble. That way, you’re guaranteed to come out ahead, no matter what.
Read our Earnest student loans review.
Pros and Cons
- Rate match guarantee plus bonus if you find a better rate elsewhere
- Option to skip one payment per year
- Nine-month grace period after graduation
- Application decision can take up to three business days
- Not available in all states
- No co-signer release offered
4. SoFi Student Loan
Best for No Fees
Vault Verified
Why It’s An Ideal Match For Students
SoFi has some of the lowest variable and fixed interest rates on school loans, along with an easy online approval process and the ability to borrow your full educational costs. Other unique perks include no fees, financial planning services and the ability to earn and redeem points to help pay down student loans.
Read our SoFi student loans review.
Pros and Cons
- Competitive variable and fixed interest rates
- No origination, late or insufficient funds fees
- Apply online and get your rate quote in three minutes or less
- Co-signer release not available until 24 months of on-time payments in most states
- Grace period after graduation is only six months
- Only four repayment term options to choose from
5. MPOWER Financing
Best for International Students
Vault Verified
Why It’s An Ideal Match For Students
When you’re not a U.S. citizen, finding the funding you need can be tricky. MPOWER Financing provides loans to qualified foreign students planning to attend school in the U.S. or Canada with up to $100,000 in fixed-rate borrowing.
Pros and Cons
- Available to international students, DACA recipients, asylum seekers, and refugees
- No co-signer or collateral required
- Check your eligibility in 30 seconds
- Only offered if attending certain U.S.- or Canada-based schools
- Maximum lifetime borrowing limit is $100,000
- Limited eligibility
6. College Ave Student Loans
Best for Part-Time Students
on Credible’s website
Why It’s An Ideal Match For Students
With some of the lowest fixed interest rates and an autopay discount, College Ave can help save creditworthy borrowers a lot of money on their educational loans. And unlike many lenders, College Ave welcomes students who attend college less than half time.
Read our College Ave student loans review.
Pros and Cons
- Several types of fixed-rate loans, including undergraduate, graduate, and parent
- Borrow up to 100% of your educational expenses
- Multiple in-school and after-graduation repayment options
- The majority of College Ave borrowers will require a co-signer
- Grace period only lasts six months after graduation for undergraduate students
- Cosigner release is only available after half of the eligible payments have been made
7. Funding U Student Loans
Best for No Co-Signer
Vault Verified
Why It’s An Ideal Match For Students
Funding U exclusively offers loans to student borrowers without the need for a creditworthy co-signer. Loans are available to all class years and are based on factors like academic achievements and your intended career path.
Pros and Cons
- Never requires a co-signer for student borrowing
- Loans are available to all class years
- Interest rates are fixed and competitive
- Underclassmen may still find it difficult to get approved
- Not available in all states
- Limited loan maximums
8. LendKey Student Loans
Best Platform for Searching Low Rates
Vault Verified
Why It’s An Ideal Match For Students
Rather than searching for the best student loan rates from lenders one at a time, platforms like LendKey make it easy to get ultra-competitive loan offers from multiple lenders with a single search. You can compare different loan terms, interest rates, and fees before choosing the one that suits your needs best.
Read our LendKey student loans review.
Pros and Cons
- Low interest rates and loan options from multiple lenders
- Borrow up to 100% of your educational costs
- Excellent consumer reviews
- Some lenders are credit unions and require membership to finalize loan
- Not available in all states
9. Sallie Mae
Best for Fast Co-Signer Release
Vault Verified
Why It’s An Ideal Match For Students
Sallie Mae offers one of the fastest co-signer release time frames—just 12 months. You could qualify for a student loan with Sallie Mae even if you attend school less than half-time. If approved, you can borrow up to your school’s cost of attendance.
Read our Sallie Mae student loans review.
Pros and Cons
- Co-signer release is available after 12 months of on-time payments
- Can qualify even if you’re enrolled less than half-time
- Broad range of loan amounts
- Only two repayment terms for most loans
- Refinance student loans aren’t available
- No prequalification application
10. Citizens Bank
Best for Private Student Loans
on Credible’s website
Why It’s An Ideal Match For Students
Citizens Bank has funded educational loans for over 40 years. It offers graduate, refinance, undergraduate and parent loans with no origination fees. If approved, you might gain access to multi-year approval, which means you can get approved for additional educational funding without agreeing to a hard credit check that lowers your credit score.
Read our Citizens Bank student loans review.
Pros and Cons
- Potential multi-year approval
- Option to prequalify
- Interest-only payment option while in school
- Most loans have only three repayment terms
- Maximum loan limits
11. RISLA
Best for Nursing Students
Vault Verified
Why It’s An Ideal Match For Students
RISLA has one of the lowest APR ranges on our list. While students pursuing all types of degrees might qualify, this option provides a special perk for nursing students. If you work as a nurse in Rhode Island after you graduate, you could qualify for a four-year, interest-free period on your student loans.
Pros and Cons
- Fast application process
- Low APR range compared to some other lenders
- Option to prequalify
- Cumulative loan limits
- Must earn at least $40,000 per year
What Are Current Student Loan Interest Rates?
While private lenders can set interest rates based on benchmark fluctuations, the borrower’s credit history and even the repayment terms you choose, interest rates on federal student loans are the same for everyone. These rates may be updated annually and vary depending on the type of loan you require and where you are in your educational journey.
Interest Rates for Direct Loans First Disbursed on or After July 1, 2024, and Before July 1, 2025 |
||
|---|---|---|
Loan Type |
Borrower Type |
Fixed Interest Rate |
| Direct Subsidized Loans and Direct Unsubsidized Loans | Undergraduate | 6.53% |
| Direct Unsubsidized Loans | Graduate or Professional | 8.08% |
| Direct PLUS Loans | Parents and Graduate or Professional Students | 9.08% |
Types of Student Loans
Paying for a college education usually requires some combination of savings, grants, scholarships, earned income while in school, and student loans. There are a few different types of student loans to consider depending on your situation, how much you need to borrow, and your current income.
- Federal undergraduate loans: Some undergraduate loans are offered directly from the Department of Education (ED). These federal loans—which may be subsidized or unsubsidized—each have standard fees, interest rates, repayment terms, and protections for borrowers. They may be needs-based or—in the case of a Parent PLUS loan—require a parent to qualify based on credit history. In order to take out a federal student loan, you’ll need to fill out a Free Application for Federal Student Aid (FAFSA) by that school year’s deadline.
- Federal graduate loans: Federal loans for graduate students are similar to federal undergraduate loans, except that student borrowers are expected to have no adverse credit history on their credit reports if applying for a Grad PLUS. Parents can also take out a Parent PLUS loan if they want to fund your graduate education. They have higher borrowing limits, but the same standard rates, repayment terms, and protections as undergraduate federal loans.
- Private undergraduate loans: Offered by private financial institutions and lenders, private undergraduate loans give students access to the additional funds they may need for undergraduate studies. Because these loans aren’t federally backed, borrowers will typically need a creditworthy co-signer. These loans don’t offer the same protections and benefits as federal loans (like loan forgiveness or income-based repayment plans) but do allow for more personalized terms.
- Private graduate loans: These loans are provided by private lenders and are designed for students enrolled in a masters or professional degree program. Since graduate borrowers are more likely to have a credit history and income, these loans may be easier to obtain without a cosigner.
- Student loan refinancing: Borrowers can refinance their existing student loans after graduation, combining multiple balances into one loan and streamlining the repayment process. Refinance loans also allow student borrowers to potentially reduce their interest rates, adjust repayment terms, and even remove a cosigner.
Federal Student Loans vs. Private Student Loans
Many students will utilize a combination of federal student loans and private student loans in order to fully fund their educational needs. While both types of loans can be beneficial—and even necessary—it’s important to understand the differences between the two.
Federal loans are those offered by the U.S. Department of Education (ED), and are only available to students who fill out a FAFSA by each year’s deadline. These loans are federally-backed with certain protections and fixed fees as well as interest rates. Some federal student loans are only offered to students with financial need, while others are credit-based and don’t require you to demonstrate need.
Private student loans, on the other hand, are available to student and parent borrowers who are able to meet each individual lender’s requirements. These loans are typically available for up to 100% of your educational expenses, though the interest rates and repayment terms may vary from one lender to the next. Private student loans can be outcomes-based but are typically offered to those to meet the lenders’ credit requirements, so co-signers are frequently needed.
Federal Student Loans Interest Rates |
|
|---|---|
Loan Type |
Fixed Interest Rate |
| Direct Subsidized Loans and Direct Unsubsidized Loans (Undergraduate) | 6.53% |
| Direct Unsubsidized Loans (Graduate or Professional) | 8.08% |
| Direct PLUS Loans (Parents and Graduate/Professional Students) | 9.08% |
Private Student Loans Interest Rates |
||
|---|---|---|
Lender |
Variable APR |
Fixed APR |
| College Ave | 4.99% – 17.99% | 3.47% – 17.99% |
| Earnest | 5.62% – 16.85% | 3.69% – 16.49% |
| LendKey | 5.54% – 13.36% | 3.99% – 12.61% |
| SoFi | 5.54% – 15.99% | 3.54% – 15.99% |
Federal Student Loans |
Private Student Loans |
|
|---|---|---|
| Interest Rates | 6.53% to 9.08% fixed | 3.59% to 17.99% fixed, 5.34% to 17.99% variable |
| Fees | 1.057% to 4.228% loan origination fee | Varies by lender; some have no fees |
| Qualification Requirements | Must be enrolled at least half-time; financial need required for subsidized loans | Credit-based; may require a co-signer |
| Borrowing Limits | Annual and aggregate limits (e.g., up to $57,500 for undergraduates) | Up to 100% of your educational costs |
| What We Like | Income-driven repayment plans, loan forgiveness programs, federal protections | Potentially lower interest rates for qualified borrowers, no origination fees |
| What We Don’t Like | Loan limits may not cover total costs, origination fees, interest accrues during deferment (for unsubsidized loans) | May have higher interest rates, fewer repayment options, less borrower protection |
What To Know About FAFSA
The FAFSA is a free form that you must submit in order to access federal financial aid, including federal student loans, grants and work-study opportunities. It usually opens on Oct. 1 each year and applies to a single school year, meaning you’ll need to submit it on an annual basis.
The FAFSA collects information on your family’s finances and asks for details about bank account balances, investments and other assets. Independent students can fill out the FAFSA on their own, while dependent students must submit the form with at least one parent.
After you submit the FAFSA, your college will review your information to determine your eligibility for aid. You’ll see the details of your offer in your financial aid award letter. Note that you’re not obligated to accept the full amount of student loans in your offer if you can get by with less.
How Does Student Loan Interest Work?
The interest on a student loan begins accumulating as soon as that loan is disbursed to your school. If you have a subsidized federal loan, the government will cover the interest payments on that debt until you graduate. If you have a federal or private unsubsidized loan, the interest accrued will simply add to your loan balance until you graduate.
Once you graduate and begin repaying your loan, the balance will continue compounding according to your fixed interest rate or the current variable rate, depending on your loan agreement. This means that the amount you owe will continue changing as payments are made and new interest is calculated.
Many private lenders give you the option to pay toward your loan while you’re still in school. These payments may be a set dollar amount (such as $25 monthly), a portion of your principal and interest, or just cover the interest as it accrues. Paying toward your loans before graduation, when possible, can help you reduce your total amount owed in the end.
Calculating Student Loan Interest
- Determine your daily interest rate: Also called the interest rate factor (IRF), this number represents how much interest is applied to your account on a daily basis. To calculate this number, simply divide your annual percentage rate (APR) by 365. So, if your loan has a fixed rate of 7.25%, your daily interest rate would be 0.0199% (0.0725 / 365 = 0.000199 or 0.0199%).
- Figure out how much you’re paying in daily interest: Once you have your daily interest rate, you can calculate how much that equates to in daily interest charges. You’ll need to multiply that IRF by your current balance. So if your new loan is disbursed today for $20,000, you’ll pay $3.98 in daily interest (0.0199% x 20,000 = $3.98).
- Confirm how often your interest is compounded: While you’ll pay interest on your loan balance daily, it won’t always be compounded (or calculated) on a daily basis. Interest may be applied daily but compounded monthly or annually, or it could be compounded daily. Depending on which calculation your loan uses, your total interest charges can vary.
- Calculate your monthly interest: If your loan interest is calculated daily but compounded monthly, it means that you’ll pay the same amount in interest for each day of the month. So in the example above, you’ll pay $3.98 in daily interest for the entire first month; if the month has 30 days, that’s $119.40 in monthly interest.
How To Qualify for a Lower Student Loan Interest Rate
Federal loans come with fixed rates, so there’s nothing you can do to qualify for a lower rate.
However, when you apply for a private student loan, lenders generally base your rate on factors like your credit score and income. Here’s what steps you can take to better your chances of securing a lower rate.
- Improve your credit score. Before applying, take steps to raise your score, like paying down credit card debt or reviewing your credit reports for inaccuracies and disputing them.
- Comparison shop. Compare rates from at least three to five student loan companies. Some will allow you to prequalify online to preview rates you could receive.
- Add a co-signer. If you know someone with a higher credit score and stable income, ask them to cosign the loan. Just let them know that if you default, it could affect your credit and theirs. Plus, explain to them that cosigning could increase their debt-to-income ratio and make it harder to qualify for future loans.
How Fed Rate Hikes Affect Student Loans
Private student loan rates have been rising in recent years in response to the Federal Reserve’s rate hikes. Although the Federal Reserve doesn’t directly set student loan rates, it does determine the federal funds rate, which impacts the rates that banks and other lenders offer.
The Federal Reserve hiked rates several times in the past few years, starting in March of 2022, in an effort to combat inflation. Student loan rates got higher, too. While lenders offered rates as low as 2% or 3% in 2021, the lowest rates available today are closer to 4% or 5%.
Economists predict that the Federal Reserve may start cutting rates in 2024. This change could cause student loan rates to decrease, though any decline will likely be gradual. Keep in mind, too, that you’ll need strong credit or a creditworthy cosigner to access a private lender’s best student loan rates.
Frequently Asked Questions
How Do I Get the Lowest Interest Rate on a Student Loan?
Getting the lowest interest rate on student loans is a combination of how well you (and your co-signer, if applicable) qualify, the amount and type of loan you take out, and how you plan to repay the debt. Co-signed loans generally qualify for lower rates than non-consigned or even outcomes-based loans, for example. And shorter repayment terms may qualify you for better rates than longer loan terms.
Can I Get a Lower Student Loan Interest Rate by Refinancing?
Once you enter the repayment phase of your loans (usually after graduating), you may have the option to refinance your student loan debt. Depending on your credit history, income, and other personal factors, refinancing may enable you to reduce your overall interest rate, consolidate and simplify your loan repayment, or both.
Do Federal Student Loan Interest Rates Change Each Year?
Federal student loan interest rates are set by Congress on an annual basis, with new rates published each spring. These rates are calculated by using 10-year Treasury note auction yield as a benchmark.
Can My Student Loan Rate Increase?
Your student loan rate won’t increase if you have a federal loan since they come with fixed rates. However, if you have a private student loan with a variable rate, your rate might rise if the Secured Overnight Financing Rate (SOFR) increases.
Should I Apply for a Private Student Loan Over a Federal Loan if I Can Qualify for a Lower Rate?
It’s generally wise to exhaust your federal student loan options first since they come with access to unique perks like student loan forgiveness programs and income-driven repayment plans. That said, if you don’t plan on taking advantage of those benefits and can qualify for a lower rate, applying for a private loan might be the better choice for you.
Can I Use a Personal Loan To Pay for College?
You may be able to use a personal loan to pay for college expenses, but some lenders prohibit the use of personal loan funds on higher education. Check with the specific lender about any loan use restrictions. Even if you can use a personal loan to pay for college, it may not be your best financing option. You may be able to get better interest rates and lower fees on a student loan. Federal student loans come with a variety of borrower protections, including income-driven repayment plans and forgiveness programs. While private student loans are not eligible for federal benefits, most private lenders let you defer payments while you’re in school and for six or nine months after you graduate.
Newsweek writer Rebecca Safier contributed to this post.
Student Loan Rate and Terms Disclosure From Credible: Rates displayed include Automatic Payment and Loyalty Discounts, where applicable. Note that such discounts do not apply while loans are in deferment. The lenders on the Credible.com platform offer fixed rates ranging from 3.39% - 17.99% APR and Variable interest rates from 4.38% - 17.99% APR. Variable rates will fluctuate over the term of the borrower's loan with changes in the Index rate. The Index will be either LIBOR or SOFR. Rates are subject to change at any time without notice. Your actual rate may be different from the rates advertised and/or shown above and will be based on factors such as the term of your loan, your financial history (including your cosigner’s (if any) financial history) and the degree you are in the process of achieving or have achieved. While not always the case, lower rates typically require creditworthy applicants with creditworthy co-signers, graduate degrees, and shorter repayment terms (terms vary by lender and can range from 5-20 years) and include Automatic Payment and Loyalty discounts, where applicable. Loyalty and Automatic Payment discount requirements as well as Lender terms and conditions will vary by lender and therefore, reading each lender’s disclosures is important. Additionally, lenders may have loan minimum and maximum requirements, degree requirements, educational institution requirements, citizenship and residency requirements as well as other lender-specific requirements. Lenders will conduct a hard credit pull when you submit your application. Hard credit pulls will have an impact on your credit score.
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