One Period, Two Anchors Two federal agencies state the rule in one sentence each. From Consumer Financial Protection Bureau, "How long does information stay on my credit report?" : "A credit reporting company generally can report most negative information for seven years." From Federal Trade Commission, "Fixing Your Credit FAQs" : "Most negative information will stay on your report for seven years, and bankruptcy information will stay on for 10 years." Neither sentence says seven years from what, and the CFPB page names no starting date at all. A charged-off account carries three dates that could serve: the month the borrower first fell behind, the day the lender wrote the balance off, and the day a collector took the file. Those can sit six months apart. The statute picks none of them. It starts the clock 180 days after the first one. What the Statute Anchors To Section 605 of the Fair Credit Reporting Act, at 15 U.S.C. 1681c, lists what...
A borrower who takes out a federal Direct Loan in October 2026 is paying a rate that stopped moving on May 12, 2026. The number was not negotiated, not shopped, and not set by the school. It was produced by a single Treasury auction, added to a fixed statutory figure, and then tested against a ceiling written into the Higher Education Act. Everything the bond market has done since is irrelevant to that loan.
The Department of Education announced the resulting figures on June 4, 2026. For loans first disbursed between July 1, 2026 and June 30, 2027, the fixed rates are 6.52% for undergraduate Direct Subsidized and Direct Unsubsidized Loans, 8.07% for Direct Unsubsidized Loans made to graduate and professional students, and 9.07% for Direct PLUS Loans. The rules below explain where each of those three numbers comes from, and which conditions change the answer.
The Index Is One Auction, Not the Market
The Department's June 4, 2026 electronic announcement states that Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans first disbursed on or after July 1, 2013 carry fixed rates determined under formulas specified in sections 455(b)(8)(A) through (C) of the Higher Education Act of 1965, as amended. The input to those formulas is not a market average and not an index published on a rolling basis. It is the high yield of one auction.
The announcement identifies it directly: "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%." That single figure — 4.468% — is the common starting point for all three 2026–27 rates.
Two consequences follow immediately. First, the rate for an entire 12-month cohort of loans is decided on one day in May, before most of the borrowers in that cohort have filed a promissory note. Second, a borrower cannot improve the figure by waiting, because the next opportunity for the index to change is the corresponding 2027 auction, which applies to a different cohort of loans.
Three Add-Ons, Three Ceilings
The add-on is the part of the formula that does not move from year to year. It is a fixed number of percentage points attached to each loan category, and it did not change between the 2025–26 and 2026–27 cohorts. The ceiling attached to each category also did not change.
| Loan type and borrower | Add-on | 2026–27 rate | Statutory maximum | Distance to cap |
| Direct Subsidized and Direct Unsubsidized — undergraduate | 2.05 | 6.52% | 8.25% | 1.73 points |
| Direct Unsubsidized — graduate and professional | 3.60 | 8.07% | 9.50% | 1.43 points |
| Direct PLUS | 4.60 | 9.07% | 10.50% | 1.43 points |
The arithmetic is worth doing in the open, because it shows how little discretion sits anywhere in the chain. The undergraduate sum is 4.468 + 2.05 = 6.518, and the announced rate is 6.52%. The graduate unsubsidized sum is 4.468 + 3.60 = 8.068, announced as 8.07%. The PLUS sum is 4.468 + 4.60 = 9.068, announced as 9.07%. Each published figure equals its sum carried to two decimal places. The June 4, 2026 announcement states the resulting rates rather than restating the rounding convention, so the convention itself should be read in the statute rather than inferred from three data points.
A Cap Is a Ceiling, Not a Rate
The three maximums — 8.25%, 9.50% and 10.50% — describe the highest rate each category can reach, not a rate anyone in the 2026–27 cohort pays. None of the three sums reached its maximum, so the cap did not bind on any 2026–27 loan. It is a limit that sat unused this year.
The distance can be restated as a threshold on the index, which makes the cap easier to reason about. Because the add-ons are fixed, the cap binds only when the auction high yield rises above cap − add-on:
- Undergraduate: the cap begins to bind above an auction high yield of
8.25 − 2.05 = 6.20%. - Graduate unsubsidized: above
9.50 − 3.60 = 5.90%. - PLUS: above
10.50 − 4.60 = 5.90%.
Those three percentages are arithmetic performed on the published add-ons and maximums, not figures the Department publishes. They are useful only as a way of seeing how far the May 2026 auction sat from the point where the ceiling would have mattered: 4.468% against a 6.20% binding point for undergraduate loans is a gap of 1.732 percentage points in the index.
The Date That Decides Which Rate Applies Is the Disbursement Date
The Department's announcements are titled by disbursement window, not by academic year: the 2026–27 figures apply to loans first disbursed between July 1, 2026 and June 30, 2027. That phrasing matters for anyone whose enrollment does not line up neatly with that window.
A loan certified in spring for a term that begins in August is governed by the date money is first disbursed, not by the date of certification, the date of the promissory note, or the date classes start. A student enrolled continuously across several years accumulates several loans, each carrying the rate of its own disbursement window, and those rates do not blend. The same student can hold a 6.39% undergraduate loan from the 2025–26 window and a 6.52% undergraduate loan from the 2026–27 window at the same time.
Repayment terms are a separate layer from the rate. Which plan a borrower ends up in changes the monthly payment without changing the interest rate on the note, and the plan comparison has its own thresholds, as set out in the crossing points between RAP and IBR across income bands.
The Market Number in September Is a Different Number
By mid-September 2026, the 10-year Treasury constant maturity yield published by the Federal Reserve Board in its H.15 release had reached 5.00%. The H.15 release dated September 16, 2026 shows the nominal 10-year constant maturity at 4.83% on September 9, 4.95% on September 10, 4.96% on September 11, 4.97% on September 14, and 5.00% on September 15.
None of those readings enters the student loan formula. Two distinctions keep them apart. First, the series differ: a constant maturity yield is an interpolated point on the Treasury yield curve, while the statutory index is the high yield of one specific auction. Second, the timing differs: the formula reads the auction held in May and then stops reading. A borrower comparing a 6.52% loan rate against a 5.00% market yield in September is comparing a figure fixed in May against a figure that has no role in setting it.
The gap between a quoted rate and the number that actually governs a cash flow is a recurring feature of Treasury pricing, and it appears in a different form when a Treasury bill's quoted discount rate is converted to a yield.
What Changed From the 2025–26 Cohort
The year-over-year comparison isolates the moving part cleanly, because only one input changed. The Department's May 30, 2025 announcement reported that the 10-year Treasury note auction held May 6, 2025 produced a high yield of 4.342%, which set the 2025–26 rates at 6.39% undergraduate, 7.94% graduate unsubsidized, and 8.94% PLUS. The add-ons of 2.05, 3.60 and 4.60 were the same in both years, and the maximums of 8.25, 9.50 and 10.50 were the same in both years.
So the entire year-over-year movement traces to the auction: 4.468 − 4.342 = 0.126 percentage points in the index, against 6.52 − 6.39 = 0.13 points in the undergraduate rate, 8.07 − 7.94 = 0.13 in the graduate rate, and 9.07 − 8.94 = 0.13 in the PLUS rate. A borrower who wants to know why a rate rose does not need a theory about policy; the answer is one auction result that came in 0.126 points higher than the previous year's.
Numbers to Re-check
Every figure above carries a date, and each one expires on a different schedule.
- The auction high yield — 4.468% from May 12, 2026. A new 10-year note auction in 2027 supplies the index for the next window. The 2026–27 figure does not change retroactively.
- The three rates — 6.52%, 8.07% and 9.07% apply to loans first disbursed between July 1, 2026 and June 30, 2027. Loans disbursed on or after July 1, 2027 will carry different rates, announced separately.
- The add-ons — 2.05, 3.60 and 4.60 as of the 2026–27 announcement. These are statutory, so they change only if the statute changes.
- The maximums — 8.25%, 9.50% and 10.50% as of the 2026–27 announcement, and unused in that year. Whether a future cap binds depends on the auction in that year.
- The market yields — the H.15 readings of 4.83% to 5.00% are from September 9–15, 2026 and change every business day. They are context, not an input.
- The rounding convention — the published rates match the sums to two decimals, but the June 4, 2026 announcement states the rates rather than the rounding rule. The announcement does not state the rule, so it should be confirmed in the statute before being relied on. Sections 455(b)(8)(A) through (C) are where the rate formulas are specified.
- Origination fees — a separate charge from the interest rate, and not covered by any figure above.
Where This Doesn't Apply
The formula described here governs a narrow set of loans, and several adjacent situations run on different rules.
- Private student loans. Nothing above applies. Private lenders set rates on their own terms, and no statutory cap of 8.25%, 9.50% or 10.50% governs them.
- Loans first disbursed before July 1, 2013. The auction-plus-add-on structure described here applies to loans first disbursed on or after that date. Older Direct Loans and loans made under discontinued programs carry rates set under earlier rules, including some variable-rate loans that are outside the scope of the announcements cited here.
- Consolidation loans. A Direct Consolidation Loan's rate is not drawn from the May auction; a Direct Consolidation Loan is not among the loan types covered by the June 4, 2026 announcement, so nothing above fixes its rate at the 6.52% figure.
- Refinancing with a private lender. This replaces a federal loan with a private contract, and the federal rate formula stops applying at that point along with the federal repayment plans.
- The monthly payment. The rate is one input; the plan, the balance, the term and household circumstances determine what is actually due each month. The rate figures above answer none of that.
- Interest subsidy periods. Whether interest accrues to a borrower during school or deferment is a subsidy question, separate from the rate. A Direct Subsidized and a Direct Unsubsidized undergraduate loan from the same window carry the same 6.52% rate and differ in who pays the interest during certain periods.
Primary sources for the figures above: the U.S. Department of Education announcement of June 4, 2026 on interest rates for Direct Loans first disbursed between July 1, 2026 and June 30, 2027; the Department's announcement of May 30, 2025 on rates for the July 1, 2025 through June 30, 2026 window; the Department's annual notice of interest rates for fixed-rate federal student loans published March 2, 2026; and the Federal Reserve Board's H.15 Selected Interest Rates release dated September 16, 2026.
This article describes published federal rules and figures as of September 2026 and is not tax, legal, or insurance advice. It does not recommend any loan, plan, or product. Borrowing and repayment outcomes depend on individual circumstances that these rules do not settle, and a borrower's own situation should be reviewed with a qualified professional and confirmed with the loan servicer and the school's financial aid office.
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