Federal Student Loan Rates 2026–2027

Federal student loan interest rates increased on July 1, 2026, for the new school year. But good news: new reduction of 1 percent for automatic payments is available to all borrowers of federal loans now and not just new borrowers. If you are a doctor with $250, 000 in loans from medical school, that reduction of 1 percent annually would save about $2500 in interest. 2026–2027 Federal Student Loan Interest Rates Federal loan interest rates reset each July 1 and are tied to June 1 auctions for 10 year treasuries. Loan rates for disbursements from July 1, 2026 through June 30, 2027 are as follows: Loan Type | Rate 2026-2027 | Rate 2025-2026 | Change Loans to Graduates Direct Unsubsidized | 8.07% | 7.94% | Up 0.13 percentage points Loans to Undergraduates Direct Unsubsidized | 6.52% | 6.39% | Up 0.13 percentage points PLUS Loans for Parents | 9.07% | 8.94% | Up 0.13 percentage points Rates have gone up by 0.13 percentage points. For example, a medical student borrowing $50,000 this fall would pay $4,035 annually in interest. Last year it was $3,970. That is $65 more each year and $260 over four years. Freshmen will no longer get Grad PLUS loans; unsubsidized Direct loans at 8.07 percent are now the main federal choice. Knowing this base rate is critical for comparing private loan offers. The Auto-Pay Rate Reduction: 1% Off Through June 2028 This update is especially important for borrowers currently in student loans. Starting July 1, 2026, if you sign up for automatic payments for federal student loans, you will receive a 1 percent discount in interest until June 30, 2028. To get full benefit you must enroll by September 30, 2026. For a doctor with $250,000 in federal student loans at 8.07 percent: Without auto payments: $20,175 in interest annually With auto payments (7.07 percent): $17,675 in interest annually Annual savings: $2,500 Total savings for two years: approximately $5000 For physicians using Income Based Repayment (IBR), where most of your payment goes towards interest and does not reduce the debt, this discount still slows growth of debt. For doctors aggressively reducing debt this directly cuts interest paid. Enroll by logging into your loan servicing portal (MOHELA, Aidvantage, Ed Financial etc.) and setting automatic payments by September 30, 2026. Reduction applies to each account. If loans are serviced by different companies you have to enroll each one. This is one of very few ways to save money with no drawbacks. There are no catches; enroll by deadline and save money for two years. How These Rates Compare to Private Loans Incoming medical students who need to borrow privately to fill gap resulting from Grad PLUS loan elimination should use federal rates as a key reference. Federal unsubsidized loans for new borrowers have fixed rate at 8.07%. Private loan rates for medical students in 2026: Good credit and co-signer: fixed 7.5 to 9.5% Good credit but no cosigner: fixed 9 to 12% Average credit: fixed 12 to 15% Variable rate: starts at 6 to 8% and may rise with market. Big difference is fixed rates for life for federal loans but variable rates for private loans that can go very high during residencies and fellowships. Starting rate is 8% and may rise to 12% by attending level. When considering private loan offers do not just compare advertised rates. Also consider: Fixed or variable rate? Origination fees (lenders charge 2 to 4% upfront, effectively increasing the rate) Terms of deferment during medical school Terms of forbearance: lenders have different rules for pauses during residency and variation is wide. What Physicians With Existing Loans Should Know Existing fixed federal loans carry rates that are set and don't change. If you borrowed at 6. 08 percent in 2021–2022 or 7. 05 percent in 2023–2024, those rates are locked for you. For physicians considering aggressive repayment versus IDR, specific loan rates matter very much indeed. Loans at 6 to 7 percent: refinancing makes good sense. You can save a lot of interest if you refinance to fixed rate between 5 and 6 percent and don't need PSLF. See refinance guide here: MedDebt Refinancing Guide. Loans at 8 to 9 percent: stronger arguments favor aggressive repayment or refinancing as well. At 8. 07 percent, paying $250, 000 costs $20, 175 per year; this exceeds salary for most specialties. Use MedDebt Calculator to find crossover point between PSLF and refinancing for balance and specialty. For PSLF pathway: for people working for qualifying employers and aiming for PSLF, loan rates matter less; all will be forgiven after 120 payments. Automatic reduction in payments still saves money, but worries about interest rates should not discourage you from a strategy that works for you. Read PSLF explained for doctors at /blog/pslf-explained-for-doctors. The RAP Rate Implication As of July 1, 2026, a new repayment plan called RAP becomes available and applies to new loans issued from then on. Under RAP, monthly payments are about 10% of Adjusted Gross Income (AGI) and forgiveness is after 30 years. This is longer than new borrowers have under PAYE. For new medical students who borrow unsubsidized at 8.07% starting July 1, RAP does not change the amount of interest you must pay. It simply changes the minimum payment. Interest accumulates whether you are on any Income Based Repayment (IDR) plan. In practice someone who earns $60,000 their first year of residency and has $200,000 in federal loans at 8.07 percent will have $16,140 in interest each year. Payments under RAP would be much lower and so balance grows. This is a problem if you aim for Public Service Loan Forgiveness (PSLF), but important if you want to eventually pay off balance. Use the IDR quiz [here] to see which plan is best suited to you. 2026–2027 Rate Summary: What To Do Right Now Enroll for automatic payments by September 30, 2026 and receive a reduction in rates to 1% until June 2028. Enrollment takes only 5 minutes with no disadvantages. If you start medical school in July 2026 fixed unsubsidized rate for federal loans is 8.07 percent. For other loans over $50, 000 per year compare total costs including rate and fees and fixed versus variable. If considering refinancing as a physician compare blended federal rates to current refinancing rates as at /refinance. Do not refinance federal loans if you can still get benefit of Public Service Loan Forgiveness Program. If you are using Income Based Repayment (IBR), you should set up auto pay. It still reduces interest growth even though payment doesn't fully cover interest. FAQ: Federal Student Loan Interest Rates 2026–2027 When do new 2026–2027 interest rates kick in? They will start on July 1, 2026 and apply to first disbursements of new federal loans after that date; existing loans retain their original rates. Does auto deduction discount apply to loans I have now? Yes, borrowers who sign up for auto deduction receive a 1 percent discount. If you sign up by September 30, 2026, that discount lasts until June 30, 2028. What will happen to rates next year? Federal student loan rates follow Treasury 10 year yields and follow Fed policy and bond markets; no one can predict them reliably. Does rate matter for those applying for PSLF? Rate matters less if applying for PSLF because forgiveness depends on number of payments and eligibility from employers, not loan balance size. Important for PSLF path is number of payments rather than rate. What is Grad PLUS rate for 2026 to 2027? Federal rate for loans disbursed July 1 to June 30, 2027 is 9. 07 percent. Grad PLUS is eliminated for new borrowers starting July 1, 2026; students with previous federal loans may still access this rate. Run Your Own Numbers Use Med Debt Calculator to model repayment strategies including PSLF and aggressive repayment together with refinancing based on your actual loan balance and specialty along with income. Free and takes only two minutes and shows projections for net worth by year.

This article is for informational purposes only and does not constitute financial, legal, or tax advice. Every borrower's situation is unique — consult a certified student loan advisor or fee-only financial planner before making repayment decisions.

For specific guidance on maximizing this benefit, physicians should review how to claim the doubled auto-pay discount before the September 30 deadline.

Disclosure: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Loan program details change — always verify current rules on studentaid.gov. MedDebt may earn a referral commission if you refinance through links on this site.