Interest rates on federal student loans are fixed, like a mortgage. A student who took out a new, undergraduate loan for this school year got a good interest rate: 3.73%. And that loan will remain at that rate for the life of the loan. The wrinkle, says Kelchen, is that "every year, interest rates reset based on the 10-year Treasury yield, plus some additional amount," a premium added to help cover the government's costs.
