Federal Student Loan Interest Rate for 2021-22

The Federal Direct Student Loan interest rates for the school year 2021-22 have been determined by the government and they will be higher for the school year 2021-22.   This will be for new federal loans disbursed between July 1, 2021, and June 30, 2022. The net increase is 0.984 from last year’s rate.  The 2020-21 rates were at record lows due to COVID.

Families and students who are considering using Federal Direct Loan need to understand how these rates are calculated and the impact of long-term student debt. It’s important to keep in mind that while the rates change every year, these changes will only affect loans during the upcoming period and have no effect on previous loans. 

The federal student loan interest rates change each year on July 1st. The interest rate is based on the May Treasury note auction each year plus the Department of Education add-on fees.  This year’s May auction resulted in an interest rate of 1.684% versus a May 2020 rate of 0.70%

This student loan interest rate impacts direct subsidized, direct unsubsidized, direct graduate, and direct plus loans. The interest rates are fixed for the life of the loan based on the loan type borrowed. If the federal loans are consolidated, then the new federal consolidated loan will have a new interest rate using the average of the loans. 

To learn more about all types of loans available, please read our comprehensive article on student loans.

In addition to the interest rate, there are processing fees associated with these loans, and these fees change depending on the type of loan the student or parent is using.

The chart below provides the new effective interest rates for Direct Federal Loans disbursed starting July 1, 2021, and before June 30, 2022.

2021-22 Federal Student Loan Interest Rate Chart

Private Student Loan Alternative 

With interest rates at record lows, some families may benefit by using a private student loan.  The biggest advantage to using a private student loan is the fees are normally much lower.  Here is a list of PayForED’s current preferred private lenders.

Variable Rates: 5.09%- 15.99% (APR)*

Fixed Rates: 4.44% - 15.99% (APR)*

*Rates includes .25% Auto Pay Discount

Variable Rates*: 6.12% – 16.45%

Fixed Rates*: 4.50% - 15.49%

*Lowest rates shown included auto debit discount

Variable with ACH: 6.15%- 16.08%

Fixed with ACH: 4.48% - 15.81%

Variable Rates: 4.98% - 12.79% (APR)*

Fixed Rates: 4.48% - 12.29% (APR)*


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