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An undergraduate Direct Loan first disbursed in the 2026-27 year is fixed at 6.52% for as long as it exists. One disbursed a year earlier is fixed at 6.39%, and one from 2023-24 at 5.50%. A senior has four loans at four different permanent rates, so run this once per loan, not once per borrower.
Last updated 1 October 2026
Educational estimate only, not financial, tax or lending advice. This page models interest accruing on one balance at one rate over a period you choose. It does not model payments, capitalization, repayment plans, the origination fee, daily accrual or your actual loan terms, and it cannot see your loans or your aid offer. Every federal figure quoted below carries its source. Confirm your own numbers against your servicer's record and your school's financial aid office.
Every Direct Loan rate for this award year comes from a single event. Federal Student Aid states it flatly: “On May 12, 2026, the U.S. Department of Treasury held a 10-year Treasury Note auction that resulted in a high yield of 4.468%.” Add the statutory add-on for the loan type and you have the rate, and the rate does not move again.
2026-27 Direct Loan rates · first disbursed on or after 1 July 2026 and before 1 July 2027
The arithmetic is worth doing yourself, because it shows there is nothing discretionary in it. 4.468 plus 2.05 is 6.518, published as 6.52. 4.468 plus 3.60 is 8.068, published as 8.07. 4.468 plus 4.60 is 9.068, published as 9.07. Each figure is the sum rounded to the nearest hundredth of a percentage point. Nobody set these rates by judgment; a bond auction in May set them.
There are ceilings, and this year they are nowhere near. Federal Student Aid: “The maximum interest rates are 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans made to undergraduate students, 9.50% for Direct Unsubsidized Loans made to graduate and professional students, and 10.50% for Direct PLUS Loans.” Work backwards from the add-ons and you can see exactly how far away that is: the 10-year Treasury high yield would have to reach 6.20% before the undergraduate cap bound, and 5.90% before either the graduate or the PLUS cap did. It was 4.468% in May. Notice that the graduate and PLUS caps bind at a lower yield than the undergraduate one, so in a high-rate year it is graduate borrowers who get the ceiling's protection first.
This is the part that most rate pages get wrong, and it is not a subtlety. The rate attaches to the loan, at the moment the loan is first paid out. Federal Student Aid says so in the same announcement that sets this year's figures: “Loans first disbursed during different 12-month periods can have different interest rates, but the interest rate determined for any loan is fixed for the life of that loan.” The regulation is identical in effect, at 34 CFR 685.202(a)(7): the rate “is a fixed rate for the life of the loan”.
So a student who started in fall 2023 and is a senior now does not have a student loan rate. They have four loans, and four rates, set by four separate auctions:
Four years of borrowing · undergraduate subsidized and unsubsidized
Take the dependent undergraduate maximum in each of those years, which is $5,500 then $6,500 then $7,500 then $7,500, and you get $27,000 of debt at a weighted average of 6.28%. That average is useful for exactly one purpose, estimating what the whole pile accrues, and it is actively misleading for the decision most people actually face.
Because if you have spare money and want to throw it at the most expensive loan, the average tells you nothing, and intuition points the wrong way. The most expensive loan in that set is not the newest one. It is the second-year loan from 2024-25, at 6.53%, which beats this year's 6.52% by a hundredth of a point and the 2025-26 loan by fourteen hundredths. Rates went up, then down, then up again, and your loan book records that history permanently.
One timing wrinkle, since it decides which bucket a loan falls into. The window is the 12 months of first disbursement, running 1 July to 30 June. A loan for the spring term of 2026-27 that is first paid out in January 2027 is still a 6.52% loan, because January 2027 sits inside that window. A loan whose first disbursement slips past 30 June 2027 is a different loan at a different rate, even if it was offered to you in the 2026-27 award letter.
Practically: open your servicer's record, or your account on the federal student aid site, and list every loan with its first disbursement date and its rate. Then run the box above once for each one. A single rate field cannot represent four loans, and this page does not pretend otherwise.
The second thing competitor pages routinely miss. A federal Direct Loan charges an origination fee, and the fee does not appear as a bill. It is removed from the money on its way to your school. The regulation is explicit about the mechanism at 34 CFR 685.202(c)(2): the Secretary “Deducts the loan fee from the proceeds of the loan”.
For the current window the fees are 1.057% for Direct Subsidized and Direct Unsubsidized Loans and 4.228% for Direct PLUS Loans, and they apply to every loan whose first disbursement falls on or after 1 October 2020 and before 1 October 2027. There is a rounding rule, and it matters at the cent level: “Loan fee calculations resulting in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents).”
So, on the first-year dependent maximum:
$5,500 Direct Subsidized Loan · fee taken once
That last line is the whole point. $5,441.87 arrives. $5,500 accrues. You are paying interest on fifty-eight dollars you never received, for as long as the loan exists.
Truncation is not a detail invented here. Round $58.135 the ordinary way and you get $58.14, and $5,441.86 would arrive. The rule says truncate, so the half-cent stays with you and the real figure is $58.13. Federal Student Aid publishes the same worked example to remove all doubt: “1.057% for Direct Subsidized Loans and Direct Unsubsidized Loans. As an example, the loan fee on a $5,500 loan would be $58.13.”
And there is a further twist that falls straight out of the same rule. Schools generally cannot hand you a year's loan in one go: 34 CFR 685.303(d)(5) requires that “The school must disburse loan proceeds in substantially equal installments, and no installment may exceed one-half of the loan”, and 34 CFR 685.202(c)(3) says the Secretary “deducts a pro rated portion of the fee from each disbursement”. Truncation therefore happens once per disbursement, on a smaller number. A $5,500 loan split into two $2,750 payments is charged $29.06 each time, because $2,750 at 1.057% is $29.0675. That is $58.12 in total, and $5,441.88 reaches your school: one cent more than the single-truncation figure. The same thing happens on a $3,500 and a $7,500 loan, and not on a $4,500 or a $6,500 one. It is a cent. It is also a demonstration that the stated rule, followed exactly, produces a figure no round-number estimate reaches.
Over four years at the dependent maximum, with two disbursements a year:
Four years of fees · 1.057%, pro rated and truncated per disbursement
Why the odd percentages? Because they are not pricing. The statutory fees are flat and round: 34 CFR 685.202(c)(1) sets a fee “not to exceed 1 percent” for subsidized and unsubsidized loans first disbursed on or after 1 July 2010, and “four percent” for PLUS. Sequestration under the Budget Control Act of 2011 raises them. Federal Student Aid describes it in those terms: the sequester “increases the loan fees charged to Direct Loan borrowers for Direct Subsidized/Direct Unsubsidized and Direct PLUS Loans from their statutory rates of 1 percent and 4 percent, respectively.” The 0.057 and the 0.228 are a federal budget mechanism showing up in your disbursement.
Parent and grandfathered graduate borrowers pay the fee at four times the rate. A $20,000 Direct PLUS Loan is charged $845.60 and delivers $19,154.40. On the new $65,000 parent PLUS lifetime ceiling, taken in full, the fees come to roughly $2,748.
One escape hatch, almost never mentioned. If you borrowed more than you needed, 34 CFR 685.202(c)(4) applies the portion of the fee attributable to any amount “Repaid or returned within 120 days of disbursement” back to your loan balance. Return it inside 120 days and you get the fee back along with the principal. Return it on day 121 and you do not.
Two sentences in the federal definitions decide thousands of dollars, and they are short enough to read in full. On the subsidized program, 34 CFR 685.102: “The Secretary subsidizes the interest while the borrower is in an in-school, grace, or deferment period, except that the Secretary does not subsidize the interest that accrues during the grace period on a loan for which the first disbursement is made on or after July 1, 2012 and before July 1, 2014.” On the unsubsidized program, in the same section: “The borrower is responsible for the interest that accrues during any period.”
Any period. Unsubsidized interest starts on the date of the first disbursement, while you are sitting in a lecture, and keeps going through the six-month grace period that follows you leaving. The grace period is defined in the same regulation as “A six-month period that begins on the day after” you stop being enrolled at least half-time.
Two consequences that follow directly. Graduate students have no subsidized option at all: “Graduate and professional students are not eligible to receive Direct Subsidized Loans for any period of enrollment beginning on or after July 1, 2012.” Every dollar of graduate Direct borrowing accrues from day one. And an undergraduate cannot choose to have the whole thing subsidized, because the annual subsidized cap is lower than the annual total, so the top slice of a maximum-borrowing year is always unsubsidized.
Here is what that mixture costs. Take the dependent undergraduate who borrows the maximum in each of four years, enrolled continuously, with the figures and rates established above:
$27,000 over four years · what accrues before the first payment is due
The unsubsidized money is 30% of what was borrowed and generates 100% of the interest that builds up before repayment starts. Run the same four years as though nothing had been subsidized and the figure is $4,778.45 instead of $1,467.20. On this borrowing pattern the subsidy is worth $3,311.25, which is more than an entire first year of borrowing, and it is handed over silently in the difference between two line items on an award letter.
That is also the answer to the only question worth asking about an award letter's loan section: not how much is offered, but how much of it is subsidized. Accepting the subsidized portion and declining some of the unsubsidized portion is a materially different decision from accepting the total.
Those accrual figures assume whole years, no payments made, and the simple accrual model this page uses. They are an illustration of the gap between the two loan types, not a quote for your loans.
Accrued interest sits in its own bucket until something moves it. The regulation names the move, at 34 CFR 685.202(b)(1): “The Secretary may add unpaid accrued interest to the borrower's unpaid principal balance. This increase in the principal balance of a loan is called ‘capitalization.’” The promissory note you signed describes what that does: capitalization “increases the principal amount you owe on the loan and the total amount of interest you will pay”.
Read that second clause closely, because it is the mechanical fact underneath this entire page. If uncapitalized interest already earned interest, capitalization could not increase the total interest you pay; it would make no difference. It increases the total precisely because interest sitting outside principal is not earning anything, and capitalization is the event that starts it earning. A federal Direct Loan is therefore not a compounding account with a monthly period. It accrues on a principal balance, and that balance only steps up at discrete, defined moments.
The promissory note carries a worked example of the cost, on $30,000 of unsubsidized loans at 6% through a 12-month deferment:
$30,000 at 6% · one year of interest, paid versus capitalized
The note's own summary: “you would pay $20 less per month and $598 less altogether if you pay the interest as it accrues during the 12-month deferment or forbearance period.” Eighteen hundred dollars of unpaid interest cost an extra five hundred and ninety-eight. That ratio, not the headline rate, is the argument for paying interest during school if you can find the money.
When does it happen? Here the honest answer is narrower than most pages suggest, and worth stating carefully. The current text of 34 CFR 685.202(b) names one circumstance: “For a Direct Loan not eligible for interest subsidies during periods of deferment, the Secretary capitalizes the unpaid interest that has accrued on the loan upon the expiration of the deferment.” That section was last amended on 1 November 2022. Older printings of the promissory note still describe capitalization at the end of the grace period and on first entering repayment, and the regulation as it stands does not require those. Income-driven repayment plans have their own rules in other sections, which this page does not cover. The reliable move is to look at your own servicer's record for your own loans rather than trust any general statement, including this one.
Annual limits for a program of at least a full academic year, from 34 CFR 685.203. The subsidized figure is a cap inside the total, not an addition to it:
Annual limits · dependent undergraduate
Annual limits · independent undergraduate
Those totals are built, not quoted. The subsidized column is 685.203(a). A dependent student adds $2,000 of unsubsidized borrowing on top under 685.203(b)(1)(i). An independent student instead adds $6,000, $6,000 and $7,000 under 685.203(c)(2). A dependent student whose parent is barred from PLUS by what the regulation calls “exceptional circumstances”, which it says include a parent who “receives only public assistance or disability benefits”, is incarcerated, has adverse credit, or whose whereabouts are unknown, can be moved onto the independent figures by a financial aid administrator. The same provision is blunt that choice is not a circumstance: “A parent's refusal to borrow a Direct PLUS Loan does not constitute ‘exceptional circumstances.’”
Lifetime totals, from 685.203(d) and (e):
A detail in those two paragraphs that cuts in the borrower's favour: both aggregate limits are measured “excluding the amount of capitalized interest”. Interest that has been folded into your principal raises what you owe but does not consume borrowing room, so a balance above the aggregate limit does not by itself make you ineligible.
And no loan of any type may exceed your cost of attendance. 34 CFR 685.203(j)(1) caps a Direct Subsidized, Unsubsidized or PLUS Loan at “the student's estimated cost of attendance for the period of enrollment for which the loan is intended” less your other financial assistance, and for a subsidized loan less your expected family contribution as well.
The 2026-27 award year opened with the largest set of changes to federal borrowing limits in years, and they are in force now rather than coming.
One gap, stated rather than filled. The new annual and aggregate limits for graduate unsubsidized borrowing could not be established from the regulation. The old figures are written to expire: 685.203(b)(2)(iii) gives a graduate annual base of $8,500 only for enrollment “ending on or before June 30, 2026”, and the $12,000 additional amount in (c)(2)(v) runs “through June 30, 2026”. The paragraphs that would carry the replacements are not there. The eCFR prints an editorial note saying the 1 May 2026 amendment to this section “could not be completed because the paragraphs do not exist” for exactly the subparagraphs where the new graduate annual and aggregate limits would sit. This page does not state a 2026-27 graduate limit, because the regulation as published does not contain one. A graduate borrower should get the figure from their own financial aid office.
If you have never borrowed before, your money may be late by design. 34 CFR 685.303(b)(5)(i) says that a student in the first year of an undergraduate program who has not previously received a Direct or Stafford loan cannot be paid loan proceeds “until 30 days after the first day of the student's program of study”. Schools can be exempt, on the basis of a cohort default rate under 10%, or under 15% for loans first disbursed on or after 1 October 2011, so plenty of students never notice it. Plenty of others discover it in week two, with rent due.
And the year's loan arrives in pieces, not one cheque, under the substantially-equal-installments rule above. Budget against the instalment, not the annual figure.
It does not know your loans. It has one rate field. You have one rate per loan, fixed on a date in the past. The only correct way to use this page is once per loan, with that loan's own rate and its own balance, and then to add the answers up.
Which accrual model is right. The simple interest option matches how a Direct Loan behaves: interest accrues against a principal balance, and unpaid interest only joins that balance at a capitalization event. The monthly compounded option is not the federal model. It is higher, and on the page's own default of $25,000 for 12 months at 6.52% it returns $1,679.60 where simple accrual returns $1,630.00. If you are estimating a federal loan, use simple.
Day counts and dates. The page turns months into years by dividing by 12. It does not model daily accrual, a 365 or 366 day denominator, your disbursement date, or the part-month at either end. We could not find a current primary federal source stating the day-count convention, so this page does not assert one, and your servicer's figure will differ from this one by a few dollars on a year's accrual for that reason alone.
Payments, capitalization and repayment plans. Nothing here reduces a balance, capitalizes anything, or models a repayment plan. It answers one question only: what does this balance accrue over this period.
The origination fee. The calculator does not deduct it, and should not: interest really does accrue on the full amount borrowed. But the cash that reached you was smaller, by the figures above.
Your aid offer. This page cannot see your cost of attendance, your Student Aid Index, your Pell award, your school's packaging policy, or what you will actually be offered. It does not know whether you are dependent or independent, which changes your limits substantially.
Anything that is not a federal Direct Loan. Private, state and institutional loans are priced by their lenders, often at variable rates, and nothing on this page is sourced for any of them.
It is not advice. It is arithmetic, with its sources named so you can check them.
Every figure on this page was read against the federal sources above on 1 October 2026, and the arithmetic was worked independently of them. Nothing you type into the calculator leaves your browser. More: the rest of the MyCampusKit tools, including the College Budget Planner for the cost-of-attendance side of the same question.
6.52% for Direct Subsidized and Direct Unsubsidized Loans made to undergraduates, 8.07% for Direct Unsubsidized Loans made to graduate and professional students, and 9.07% for Direct PLUS Loans, for any loan first disbursed on or after 1 July 2026 and before 1 July 2027. All three come from one event: a 10-year Treasury Note auction held on 12 May 2026 with a high yield of 4.468%, plus a statutory add-on of 2.05, 3.60 or 4.60 percentage points. Each rate is then fixed for the life of that loan.
Because the rate is set by the 12-month window in which each loan was first disbursed, and is then fixed forever. A student who borrowed in each of the last four academic years holds four loans at four permanent rates: 5.50% from 2023-24, 6.53% from 2024-25, 6.39% from 2025-26 and 6.52% from 2026-27. There is no single rate to show, which is why this page should be run once per loan rather than once per borrower.
$5,441.87, or $5,441.88 if the school pays the loan out in two installments. The origination fee is 1.057%, and fee calculations must be truncated rather than rounded to cents, so $5,500 at 1.057% is $58.135 and the fee charged is $58.13. Federal Student Aid uses this exact example: “the loan fee on a $5,500 loan would be $58.13”. The amount you owe interest on is still $5,500.
Not the way a savings account does. Interest accrues on the unpaid principal balance, and interest that has accrued but has not been capitalized does not itself earn interest. It only begins to once a capitalization event adds it to principal. The promissory note puts the consequence plainly: capitalization “increases the principal amount you owe on the loan and the total amount of interest you will pay”. The monthly compounding option on this page is not the federal model and returns a higher figure: $1,679.60 against $1,630.00 on $25,000 for 12 months at 6.52%.
Who pays the interest while you are enrolled. On a Direct Subsidized Loan the regulation says the Secretary subsidizes the interest during in-school, grace and deferment periods. On a Direct Unsubsidized Loan, “the borrower is responsible for the interest that accrues during any period”. On a four-year dependent undergraduate who borrows the maximum every year, $19,000 of the $27,000 can be subsidized and $8,000 cannot. That $8,000 accrues about $1,467 of interest before the first payment is due. The $19,000 accrues nothing you owe.
A dependent undergraduate in a program of at least a full academic year may borrow $5,500 in the first year, $6,500 in the second and $7,500 in the third and later years, of which at most $3,500, $4,500 and $5,500 respectively may be subsidized. An independent undergraduate may borrow $9,500, $10,500 and $12,500 with the same subsidized caps. The lifetime totals are $31,000 for a dependent undergraduate and $57,500 for an independent one, with at most $23,000 subsidized in either case.
Three things, and they are live for the 2026-27 award year. Parent PLUS borrowing is now capped at $20,000 per academic year and $65,000 in total per dependent student, where before it was cost of attendance minus other aid with no dollar ceiling. Graduate and professional students may no longer borrow a Direct PLUS Loan at all. And a lifetime maximum of $257,500 now applies to what one student may borrow. Each has an exception for a student who was already enrolled in the program on 30 June 2026 and already had a Direct Loan for it, and that exception lapses if the student withdraws.
Partly, and only quickly. The regulation applies the portion of the fee attributable to any part of the loan that is repaid or returned within 120 days of disbursement back to the loan balance. Return $2,000 of a $5,500 loan inside that window and the fee charged on that $2,000 goes back too. Outside 120 days it does not.
No. This page is educational, it models interest accrual only, and it cannot see your loans, your rates, your disbursement dates or your aid offer. Confirm every figure against your servicer's record and your school's financial aid office.