Best student loan rates in July 2022

The Bankrate guide to choosing the best student loans

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When shopping for a student loan, look for a competitive interest rate, flexible repayment terms that meet your needs, generous hardship options and minimal fees. Loan details presented here are current as of May 20, 2022. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability. To learn more, read our methodology section above.

What are current student loan interest rates?

Current interest rates on student loans vary based on where the loan originates, the type of interest rate and the creditworthiness of the borrower.

What are interest rates for federal student loans?

Federal student loan rates change each year. Your rate depends on when you took out your loan.

Source: The Federal Register

Federal vs. private student loans

Federal student loans are offered by the U.S. Department of Education, while private student loans are offered by banks, credit unions and private lenders. It's almost always best to start your search with federal student loans, though private student loans also offer some unique perks.

The biggest difference between federal and private loans is in the rates and eligibility requirements. Private lenders base your rates on your credit score, with a poor credit score leading to higher rates. Federal student loans, on the other hand, offer every borrower the same rate for each type of loan. The average interest rate on a private student loan can range from around 1 percent to 13 percent, while federal loans charge 3.73 percent, 5.28 percent or 6.28 percent, depending on the loan type.

Some federal loans do have borrowing limits, so borrowers will often turn to private lenders to finance their remaining academic costs. However, while private loans can often finance up to the total cost of attendance, they don't offer as many ways to customize your repayment plan. Private student loans also don't offer any opportunities for loan forgiveness; loan forgiveness programs and any executive action canceling student debt would apply only to federal loans.

How to qualify for a student loan

Every lender has different eligibility requirements for student loans, but generally you’ll need to:

• Be enrolled in an eligible school.
• Meet age, education and citizenship requirements.
• Use the loan for qualifying education expenses.
• Have a good credit score and consistent income (or have a co-signer who does).
• Maintain good grades while in school.

How does student loan interest work?

When you apply for a student loan, you'll be offered an interest rate. This interest rate is an extra percentage of your loan amount that you'll have to pay each month.

With federal loans, this rate is the same for all borrowers and is determined by the federal government each year. With private loans, this rate is determined by your credit score, income and more. The most affordable private student loans go to students in good financial health with high credit scores.

Learn more: How Fed rate changes impact student loans

Prospective borrowers can usually choose between a fixed and a variable interest rate. Fixed interest rates remain the same over the life of the loan, while variable rates change based on market trends. Federal student loans are always fixed, while private student loans can be either fixed or variable.

Learn more: Fixed vs. variable student loan rates

How is student loan interest calculated?

While browsing interest rates, you can calculate your student loan interest to estimate how much you will pay each month. Here's how to do it:

1. 1. Find your daily interest rate: Divide your annual interest rate by the number of days in a year (365).
   2. Determine your daily interest accrual charge: Multiply your daily interest rate by your principal balance.
   3. Calculate your monthly payment: Multiply your daily interest by the number of days in your billing cycle.

If you have $10,000 in student loans and a 6 percent interest rate, with a 30-day billing cycle, you would pay a little over $49 in interest monthly.

You can also calculate how much interest you'll pay over the life of your student loan by using a student loan calculator.

Learn more: How to calculate student loan interest

Student loan news updates

The student loan landscape has been changing in recent months, driven by the coronavirus pandemic and forgiveness policies implemented by the Biden administration. Some current student loans trends to be aware of include:

• Federal student loans are in administrative forbearance: President Biden extended the forbearance period for federal loans through August 31, 2022. Federal student loan payments are not required, and interest charges and collections activities are paused.
• Borrowers with defaulted FFEL student loans are in forbearance: While FFEL student loans were originally not included in administrative forbearance, borrowers with defaulted FFEL student loans can now benefit from coronavirus relief.
• Federal student loan interest rates will be higher in 2022-23: Federal student loans for the upcoming school year are 1.26 percentage points higher than they were for 2021-22. Borrowers who take out loans after June 30, 2022, will be subject to these higher rates.
• Public Service Loan Forgiveness is undergoing an overhaul: An revision to what constitutes a "qualifying payment" toward PSLF has resulted in thousands of borrowers gaining progress toward loan forgiveness. Borrowers who apply for PSLF through Oct. 31, 2022, can benefit from this temporary waiver.
• Student loan forgiveness is now tax-free: The $1.9 trillion stimulus package passed in March 2021 — also known as the American Rescue Plan — made student loan forgiveness tax-free through 2025.

How the 2022 Fed rate hike impacts student loans

The most valuable college majors

College is a big investment regardless of how you pay for it, and some forward-planning will help ensure that your investment pays off. A Bankrate study of the most valuable college majors found that STEM degrees have consistently high median incomes and low unemployment rates, while arts degrees rank near the bottom in terms of overall value.

Of course, there are plenty of factors that influence the value of your degree, including the cost of your school, the likelihood that you’ll need an advanced degree and the fulfillment you find in your chosen career path. A performing arts degree may not be as financially rewarding as a degree in computer engineering, but it allows many graduates to pursue their dreams and land a satisfying job after college.

If you’re looking for the most bang for your buck, these five college majors at the top of our rankings are a good place to start your search:

FAQs about student loans

Methodology

To find the best student loans, Bankrate first looked at lenders that have a national reputation and serve borrowers across the U.S. We then narrowed down the field based on APR ranges, loan options and loan amounts to ensure that the lenders offered competitive loans for a variety of borrowers. Lenders that offered loans for undergraduates, MBA students, medical students and more, for example, scored higher than those offering just one type of loan.

To determine the final rankings, we then evaluated eligibility requirements and any standout features that make a loan uniquely suited to a variety of needs — for instance, the ability to apply for multiple years of school or receive cash rewards upon graduation.