The U.S. Treasury held its annual 10-year note auction on May 12, 2026. That auction's result — a high yield of 4.468% — mathematically sets interest rates on all federal student loans disbursed from July 1, 2026, through June 30, 2027. Confirmed rates: 6.52% for undergraduate Direct loans, 8.07% for graduate Unsubsidized loans, and 9.07% for Parent PLUS and Grad PLUS loans.

Every May, a single Treasury auction quietly sets what millions of families will pay to borrow for college. Most people never hear about it. The May 12, 2026 auction is now complete, and the 2026–27 federal student loan rates are confirmed.1

Here's what the rates are, what they mean in real dollars, and what the broader picture looks like for borrowers this fall.

The Confirmed Rates for 2026–27

Based on the May 12 Treasury auction high yield of 4.468%, the fixed interest rates for federal student loans disbursed on or after July 1, 2026, are:12

Loan Type2026–27 Rate
Undergraduate Direct Subsidized and Unsubsidized6.52%
Graduate Unsubsidized8.07%
Parent PLUS and Grad PLUS9.07%

These rates are fixed for the life of each loan. A loan disbursed in August 2026 carries 6.52% for its entire repayment term, regardless of what happens to interest rates in future years.

How the Formula Works

Federal student loan rates are not negotiated and not tied to your credit score. They are determined each year by a formula established in the Bipartisan Student Loan Certainty Act of 2013:

10-year Treasury note high yield + fixed add-on (varies by loan type)

The May 12, 2026 auction produced a 4.468% high yield. The fixed add-ons by loan type:

  • Undergraduate loans: +2.05% → 6.52%
  • Graduate Unsubsidized: +3.60% → 8.07%
  • PLUS loans: +4.60% → 9.07%2

All three rates fall below their statutory ceilings. For context on how the formula works and what rates looked like before the pandemic, our earlier explainer on how student loan rates are set covers the full history.

What These Rates Cost Over a Repayment Term

The interest rate is an abstract number until you see what it adds up to over 10 years.

Undergraduate borrowers: The federal annual borrowing limit for a dependent undergraduate student ranges from $5,500 (year one) to $7,500 (years three and four). A student who borrows the maximum over four years — roughly $27,000 — and repays on the standard 10-year plan at 6.52% will pay approximately $9,800 in total interest on top of the principal.

Parent PLUS borrowers: A $30,000 Parent PLUS loan at 9.07% over 10 years produces approximately $15,800 in total interest. Many families borrow PLUS loans across multiple years of enrollment, and the cumulative interest burden grows accordingly. If you're weighing a PLUS loan against other options, the pros and cons of Parent PLUS loans are worth reviewing before you sign.

Graduate students: The graduate Unsubsidized rate of 8.07% applies to loans taken out before July 1. After July 1, Grad PLUS loans are eliminated and graduate students face new borrowing caps. Understanding federal vs. private student loan differences matters more now for graduate borrowers than it did a year ago.

$15,800

July 1 Brings Structural Changes, Not Just New Rates

The interest rate is one piece of what changes this summer. The RISE final rule, published May 1, 2026, restructures federal lending in ways that affect borrowers beyond the interest rate:

  • Parent PLUS loans disbursed after July 1 are capped at $20,500 per year and $65,000 per student lifetime
  • Grad PLUS loans are eliminated for new borrowers after July 1
  • Graduate student borrowing is capped at $100,000 total (professional programs up to $200,000)
  • New loans taken out after July 1 are not eligible for income-driven repayment under most legacy plans

For families where the parent needs to borrow more than $20,500 in a single academic year, the new cap means you'll need to plan differently — either looking at other ways to cover costs or evaluating private lending options to bridge what federal loans won't cover.

If you're a parent who planned to borrow Parent PLUS loans above the new $20,500 annual cap starting this fall, act before July 1. Loans disbursed before the cutoff follow the current rules. Loans disbursed after July 1 face the new caps. Talk to your school's financial aid office now about your disbursement timeline.

What Different Borrowers Should Do Before July 1

Undergraduate students: Nothing urgent on the rate side. Submit your FAFSA and accept your financial aid award. Your school will disburse loans when the academic year begins, and you'll receive the 6.52% rate on whatever you borrow this fall.

Parents borrowing PLUS loans: If you need more than $20,500 this year, the timeline matters. Work with your financial aid office to understand your school's disbursement schedule and whether borrowing before July 1 is feasible.

Graduate students entering fall 2026: Grad PLUS loans end July 1. Review your total funding package — including fellowship support, institutional aid, and the new federal Unsubsidized loan limits — before making an enrollment commitment. For programs where the total cost exceeds what federal loans cover, private student loans for graduate school are now the primary alternative.

Current borrowers on the SAVE plan: Your existing loans keep their original interest rates. The new rates and loan caps apply only to fresh disbursements beginning July 1. Your repayment plan transition — from SAVE to the new RAP plan launching July 1 — is a separate issue from this rate announcement.

The rate you're quoted when you accept your award letter is not guaranteed until your loan is actually disbursed. If your school's disbursement crosses from June into July (common for summer terms or schools with late-August start dates), confirm the disbursement date in writing. A loan disbursed July 1 or later gets the new 2026–27 rate, not the prior year's.

The Broader Context

The 6.52% undergraduate rate is roughly double what borrowers paid in 2020–21, when the undergraduate rate sat at 2.75%. It's not dramatically different from the past two years, but it's also not returning to pre-pandemic levels anytime soon given where Treasury yields remain.

The more consequential financial story this summer is not the interest rate shift — it's the structural changes to loan caps, Grad PLUS elimination, and repayment plan options taking effect July 1. The rates are confirmed; what changes around them is what most families actually need to understand.

For a full picture of how much college actually costs and how student loan interest fits into that total, working through those numbers before borrowing is the most practical step any family can take right now.

Footnotes

  1. CNBC. (2026, May 12). Student loan interest rates are set to rise for 2026-27. cnbc.com. https://www.cnbc.com/2026/05/12/student-loan-interest-rates.html ↩ ↩2

  2. The College Investor. (2026, May). Federal Student Loan Rates Set To Rise For The 2026-27 School Year. thecollegeinvestor.com. https://thecollegeinvestor.com/80477/federal-student-loan-rates-set-to-rise-for-the-2026-27-school-year/ ↩ ↩2