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Grad School Loan Rates are Higher Than Undergrad: How to Lower Yours

Kathryn Morstad

If you are participating in or have recently graduated from a grad school program, you may be facing a large student loan debt with high interest rates. You may also be looking for ways to easily manage those loans and save money.

Luckily, interest rates are more favorable now than at any time since 2008. It may be a good time to consider your options including refinancing those high interest grad school loans.

Why are Grad School Loan Rates Higher than Undergrad Loans?

There is a significant difference between grad school loans and the undergraduate loans you may have acquired when starting out on your education path. Here’s why:

Federal Loan Rates Set by Congress

Federal loan interest rates are set by congress each year, and graduate interest rates for both Unsubsidized Loans and Grad PLUS loans are typically much higher than those offered to undergraduates.

Increased Borrowing Capacity

Take Stafford loans as an example. Undergraduates can borrow up to $5,500 in the first year, $6,500 in the second, and $7,500 for each subsequent year. The total maximum is capped at $31,000.

However grad students can borrow up to $20,500 per year and have a maximum cap of $138,500 (and even more for certain health-related professions).

No Access to Subsidized Loans

As an undergraduate, you have access to subsidized loans.  With subsidized loans, interest doesn’t start to accrue until you graduate or drop down below half time attendance (usually considered 6 or less credit hours) and are no longer considered full time.

With grad school, there are only unsubsidized loans available which means that interest starts to accrue as soon as you sign the papers.

Historically, What Have Been the Rates for Grad School Loans?

While the cost for grad school has continued to go up, the interest rates charged on federal loans has been more of a rollercoaster. Both direct unsubsidized loans and direct PLUS loans went down during the 2013-2014 academic year but have been slowly rising since that time.

Fixed Interest Rates for Direct Unsubsidized Loans

2019-2020       6.08%

2018-2019       6.6%

2017-2018       6.0%

2016-2017       5.31%

2015-2016       5.84%

2014-2015       6.21%

2013-2014       5.41%

2012-2013       6.8%

2011-2012       6.8%

2010-2011       6.8%

Fixed Interest Rates for Direct PLUS Loans

2019-2020       7.08%

2018-2019       7.6%

2017-2018       7.0%

2016-2017       6.31%

2015-2016       6.84%

2014-2015       7.21%

2013-2014       6.41%

2012-2013       7.9%

2011-2012       7.8%

2010-2011       7.8%

The good news is that with the federal funds rate at 0%-.25% (as set by the Federal Open Market Committee – the “Fed”), student loan rates should be at historic lows for the foreseeable future.

How to Get a Lower your Grad School Loan Rate and Save Money

If you find yourself with high interest grad school loans, you may be able to save considerable money by refinancing to a loan with better terms.  Private lenders offer flexible loan options with fixed or variable interest rates and repayment periods.

With outstanding credit, fixed and variable rates can be as low as 3.49% and 1.24%, respectively.

On the flip side, private lenders will require their debtors to meet credit worthiness standards that will include a credit check and income verification as part of the final process. If you don’t think you would meet the lending criteria, consider finding a family member or friend who does and ask them to be your co-signer.

With a private refinance, you will also lose access to all of the federal loan repayment options, such as deferment and income-driven repayment plans.

Key Benefits Student Loan Refinancing

Besides saving perhaps thousands of dollars over the life of your grad school loans, you will also find these potential benefits:

  • With lower interest, you can secure a lower monthly payment that will free up cash for other things.
  • You can consolidate multiple loans into a single loan for a more manageable budget and just one monthly payment.
  • You can increase your payment by shortening the repayment period and pay your loan off sooner.  This will accelerate your ability to focus on other life choices, like buying a house or starting a business.
  • You can reduce your monthly payment by extending your repayment timeframe which will give you a better debt-to-income ratio and improve other financing options, i.e., a mortgage or car loan.

The 4 Best Companies to Refinance Student Loans

Our Top-Rated Picks for 2022 Offer Low Rates and No Fees


No Maximum Loan Amount

Fixed Rate

4.48% – 7.29% APR 4

Variable Rate

3.53% – 7.24% APR 4

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Fixed Rate

4.49% – 8.99% APR 3

Variable Rate

4.49% – 8.99% APR 3


Precision Pricing — Pick Your Monthly Payment

Fixed Rate

4.39% – 8.99% APR 2

Variable Rate

3.99% – 8.29% APR 2

Loans Available in All States but Maine and Oregon

Fixed Rate

3.94% – 8.48% APR 5

Variable Rate

Not Offered

Find Your Lowest Student Loan Refinance Rate

Once you decide that refinancing is the best option for your financial situation, then you have to wade through tons of sites offering advice and information. It can be overwhelming.

Purefy understands the market and has put together a rates comparison tool that will help you navigate the top lenders in the industry and get the best rate options based on your particular set of circumstances. And there’s no impact to your credit report for an initial pre-qualifying rate check.

By taking a few minutes to fill out some standard personal info, our tool will provide you with a comprehensive list of pre-qualified offers from national lenders. You can then take the time that you need to review your options and consider the scenario that best meets your long-term financial goals and budget.

Next Steps…

If you have high student loan debt from grad school loans, you can refinance to a lower rate and save money. And whether you want to pay your debt off sooner, or stretch out those payments for a longer period, we can help you find the right lender to make that happen.

In addition, different lenders have unique benefits and Purefy is available to help you traverse the options. All of your answers can be found in one place with award-winning customer service and access to the industry’s best and most trusted lenders.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/01/2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.24% APR to 8.54% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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