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Federal student loan interest rates in the U.S. are expected to rise slightly for the 2026-27 academic year, according to an analysis shared with CNBC on Tuesday by a higher education expert. Mark Kantrowitz.
The projected increase would apply to federal student loans issued between July 1, 2026 and June 30, 2027. The federal government sets student loan interest rates once a year based in part on Treasury yields.
Federal student loan rates are generally fixed for the life of the loan, meaning new borrowers next academic year could face higher repayment costs over time, according to Tuesday’s CNBC report.
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Kantrowitz based his estimates on the May auction of 10-year Treasury bonds held by the U.S. Treasury Department, where the high-yield rate hit 4.47% on Tuesday.
Kantrowitz estimated that federal undergraduate student loan rates could rise from 6.39% to 6.52%. Graduate student loan rates could rise from 7.94% to 8.07%, while Parent PLUS loan rates could rise from 8.94% to 9.07%.
The analysis showed that borrowing $10,000 under the projected undergraduate rate would result in monthly payments of approximately $113.64 under a standard 10-year repayment plan. Total reimbursement over the decade would increase by about $76 compared to current rates.
The higher rates are expected to take effect as the proposal is implemented. “Law on a big beautiful bill” eliminates several affordable student loan repayment and debt relief options for financially distressed borrowers.
More than 42 million Americans currently have student loans, while total outstanding federal education debt exceeds $1.6 trillion.
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Payment pressure continues to increase
The expected rate increases come as student loan repayment pressure continues to increase in the US.
Previous reports showed that more than 7 million borrowers will need to exit the Biden-era SAVE payment program after a federal court struck down the plan in March. Alternative repayment plans generally require borrowers to contribute a greater proportion of their discretionary income toward monthly payments.
Data from the Federal Reserve Bank of New York also previously showed that serious student loan delinquency rates had surpassed 16%. About 7.7 million student borrowers were already in default by the end of 2025, representing approximately $180 billion in troubled loans.
Treasury yields remain elevated
Treasury yields have also remained elevated amid rising U.S. borrowing needs and concerns about inflation. Earlier this month, Treasury Department documents showed that the U.S. government may need to borrow more than $2 trillion from private markets in fiscal 2026, adding pressure to financing costs across the economy.
Image via Shutterstock
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