Average Student Loan Interest Rate in January 2025

An important factor when shopping for student loans is looking at the interest rate. But interest rates can be a little confusing. You may ask yourself questions like:

• What is a good interest rate?
• How do they vary?
• What should I even look for?

Before you panic, don’t worry. We’ve got your back. To give you an idea of what to look for in interest rates, let’s go over the average student loan interest rates.

Average Student Loan Interest Rate 

Interest rates influence the total repayment costs you’ll have. So, to help you make a better-informed decision, it’s a good idea, then, to learn what interest rates are now. The interest rates will vary depending on a variety of factors. This includes what type of loan you get, your lender, and sometimes even your credit score.

>> MORE: Compare interest rates across top student lenders

For example, let’s take a look at the different federal student loan interest rates. These all vary depending on the type of loan and student. According to the federal student aid website, the current federal student loan interest rates are as follows:

1. Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduates – 5.50%
2. Direct Unsubsidized Loans for Graduate or Professional Students – 7.05%
3. Direct PLUS Loans for Parents or Graduate/Professional Students – 8.08%

Interest Rates for Direct Loans First Disbursed on or After July 1, 2023, and Before July 1, 2024. If your loan was disbursed before July 1, 2023, you likely have a different interest rate.

>> MORE: What are direct consolidation loans?

Meanwhile, the average private student loan interest rate ranges from 6% to 7% according to Education Data. The exact interest rate you might get depends on your lender and financial situation. The overall average student loan interest rate, though, is 6.87%. This number includes data from both private and federal loans.

Student Loan Interest Rates on Sparrow 

When shopping around for student loans, you want to look for the best interest rates. Sparrow partners with private lenders to get you those best rates. Here’s a quick overview of what interest rates you can find on Sparrow.

What is a Good Student Loan Interest Rate? 

Keeping in mind that you’ll repay not only the loan principal but the interest also, a good student loan interest rate is going to be low. In general, the lower, the better. This is because the interest rate is an indicator of how much interest you’ll pay. The higher the interest rate, the more you can expect to pay during repayment. For example, let’s say you took out a $30,000 loan on a 15-year repayment term. Using that information, let’s create two scenarios with different interest rates.

>> MORE: Which is better: variable or fixed interest rate?

In the first scenario, you’ll have an interest rate of 7%. With this interest rate, you’ll pay $48,537 over the course of your repayment period.

In scenario two, you’ll have an interest rate of 5.8%. With this interest rate, you’ll pay $44,987 throughout your repayment period.

Here’s a table to help you understand the information easier:

Notice how even just a 1.2% difference in interest rates results in saving thousands of dollars. That’s why the best interest rates are the lowest rates you can get along with good repayment terms. Doing this will help you save a lot of money in the long run.

Final Thoughts from the Nest 

Interest rates can be a little tricky. They vary a lot depending on the type of loan you have (or are looking for). The most important thing to keep in mind is to try to get as low an interest rate as you can with good loan terms.

As you saw earlier, Sparrow offers great interest rates from our partnering lenders. All you have to do to take advantage of these rates is fill out the Sparrow form. Once you do, it will match you with what you are pre-qualified for from any of our 15+ partner lenders. So, get started now to find great private loans that best match what you need.

Sparrow aims to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

The loan options shared are in no particular order. Rates listed may reflect the lender’s autopay discount. Interest rates are subject to change.