U.S. Private Loan Rates Dip as Delinquency Soars in Wake of Federal Repayment Changes

Lead Average interest rates on 10-year private student loans fell to 7.00% today, while federal borrowers face record‐high delinquency amid resumed interest accrual and ongoing plan litigation.

Nut Graf The private‐loan market saw a modest rate decline, offering relief to new applicants, even as nearly six million federal borrowers now risk default after interest resumed Aug. 1 under the SAVE plan and paused payments extend only through January 2026. The intersecting trends underscore mounting pressure on all student-debt holders and servicers.

Private Loan Rates Edge Lower Subhead: Fixed-rate loans become slightly more affordable

  • The average rate on 10-year fixed-rate private student loans dropped from 7.48% to 7.00% for credit-strong borrowers this week, according to Credible data for the period ending September 13.
  • Five-year variable-rate loans averaged 7.56%, down slightly from prior levels as lenders compete for new applicants.

Federal Repayment Landscape Subhead: SAVE plan borrowers accrue interest despite paused payments

  • Interest on federal loans in the SAVE plan resumed August 1 after a court injunction ended the 0% subsidy, causing balances to grow for approximately eight million borrowers even though monthly payments remain on hold until January 31, 2026.
  • Ongoing litigation threatens the future of SAVE, potentially forcing a return to full payments sooner and freezing forgiveness credits under all legacy income-driven plans.

Delinquency Rate Hits New High Subhead: Millions teeter on the brink of default

  • TransUnion data show nearly six million federal borrowers are at least three months behind, with the delinquency rate climbing to 29% among 21 million with payment due, the fastest deterioration since the Great Recession.
  • Experts warn that extended forbearance confusion and accrued interest could push more borrowers into default unless proactive repayment or plan adjustments occur.

What Borrowers Should Do

  • Monitor servicer accounts closely for interest calculation errors and misdated due dates.

  • Consider switching to an alternative income-driven plan if crediting delays jeopardize progress toward forgiveness.

  • Explore refinancing private loans to lock in recent rate declines, but weigh the loss of federal protections.

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