Sep 09, 2025

Question of the Day: What's the new interest rate on federal student loans?

It was 6.53% for the 2024-2025 school year. What's your best guess for this school year? 

 

Answer: 6.39%

 


Questions:

  • How do you think this interest rate compares to the interest charged on credit card debt?
  • Use a student loan calculator to find out how much interest a college graduate will pay if they have the average student debt of ~$30,000 and a 10-year repayment term.
  • Hypothesize: What is one impact of a high interest rate on federal student loans?

 

Click here for the ready-to-go slides for this Question of the Day you can use with your students. 

 

Behind the numbers (Federal Student Aid and Nerdwallet):

"Each May, the government sets federal student loan interest rates for the upcoming academic year based on the yield of the 10-year U.S. Treasury note and including an “add-on percentage.” The result becomes the interest rate for new loans issued between July 1 and June 30 of the following academic year.

Here’s how that works in practice. The latest 10-year Treasury note yield was 4.342%, and the add-on percentage for direct undergraduate loans is 2.05%. Add the two together to get the new interest rate for direct undergraduate loans: 6.392%, rounded down to 6.39%.

The lower rates could save you money over the life of your loan — but not much.

For example, let’s say you take out a $12,500 direct loan, which is the maximum amount an undergraduate can borrow in a single year. At the previous 2024-25 interest rate of 6.53%, you’d pay about $4,555 worth of interest over a 10-year repayment term. That same loan taken out in 2025-26 at the new 6.39% interest rate costs you $4,448 over 10 years. It’s a small difference, but still dollars saved.

Use a student loan repayment calculator to see how interest could add up for your specific loan amount and type."

 

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Learn to manage student debt while balancing other tradeoffs in NGPF's award-winning PAYBACK game in the NGPF Arcade. Played more than 3.1 million times! 

 

 

About the Author

Kathryn Dawson

Kathryn (she/her) is excited to join the NGPF team after 9 years of experience in education as a mentor, tutor, and special education teacher. She is a graduate of Cornell University with a degree in policy analysis and management and has a master's degree in education from Brooklyn College. Kathryn is looking forward to bringing her passion for accessibility and educational justice into curriculum design at NGPF. During her free time, Kathryn loves embarking on cooking projects, walking around her Seattle neighborhood with her dog, or lounging in a hammock with a book.

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