Federal Direct Loan interest rates for graduate school increase
Each spring, we closely monitor the federal treasury yields. With all of the economic uncertainty this year, treasury yields have been volatile and trending upwards. Student loan interest rates for the next academic year are adjusted using the high yield of the last U.S. 10-year Treasury note auction before June 1st. That auction was held May 12, 2026.
The high yield, plus an add-on factor per Direct loan type, sets the fixed rate you are charged for the life of those loans. For veterinary students, the graduate/professional school Direct Unsubsidized loan interest rate for loans received after July 1, 2026, will be 8.07%, up slightly from 7.94% last year. The Direct Graduate Plus loan rate will be 9.07%, up from 8.94% last year.
With the cost of veterinary school higher than ever and interest rates near historical highs, it’s never been more important to carefully consider how much student loan debt you need for your veterinary education. The more you borrow, the more interest you will accrue. Since interest accrues from the moment you receive your Direct loans, student loan interest can add tens of thousands of dollars to your veterinary school costs.
In-School Unpaid Interest Accrual for a recent 2026 DVM Graduate
For example, $40,500 of Direct Unsubsidized Loan received this August 2026 to continue a four-year veterinary program will add $8,295 of interest for that balance at graduation. If you need an additional $25,000 of Direct PLUS Graduate loans in that same year, you’ll add another $5,755 of interest to your total for that loan by graduation. That’s $14,0501 of interest for your second year of loans. Use the VIN Foundation My Student Loans tool and In-School Loan Estimator to see how much your loans will cost you during school.
New Direct Loan Borrowing Limits start July 1, 2026
Veterinary students starting their veterinary program on or after July 1, 2026, or those receiving their first loan for veterinary school on or after July 1st, will be subject to new federal borrowing limits. Those professional school (i.e., veterinary school) students will be limited to $50,000 of Direct Unsubsidized loans per year with a $200,000 program maximum. Direct Grad PLUS loans will no longer be available to those new borrowers starting July 1, 2026.
Funds required beyond the new limits will need to come from Health Professions Student Loans, Loans for Disadvantaged Students, private loans, scholarships, grants, 529 funds, or other personal/family funds. Review the VIN Foundation 40 in 60 Project to see how new borrowing rules look for the veterinary schools in the U.S., Puerto Rico, and the Caribbean.
Veterinary School: Private Student Loans vs. Federal Student Loans
Your School's Cost Of Attendance
Future and current veterinary students – It’s more important than ever to Apply Smarter to veterinary school and Borrow Better while you’re in school. The less you borrow, the less interest accrues, and the less you’ll have to manage in repayment. It’s ALWAYS easier to manage less than more when it comes to student loan repayment. Review your school’s published cost of attendance (COA) and look for ways to reduce the loans offered to you in your financial aid awards. If your school offers Health Professions Student Loans or Loans for Disadvantaged Students, apply for and accept them when possible. These are two of the only subsidized loans available for veterinary school (loans that do not accrue interest while in school).
For those students with continued access to Direct Grad PLUS loans, you’re frequently offered enough federal student loans to cover the full COA. Use your budget to determine if you actually need to accept all the loans you are offered. The COA sets the maximum amount you can borrow. Your mission, if you choose to accept it, will be to accept only budgeted needs, and ideally, less than the maximum COA.
Reducing Loan Awards and Returning Loans Vs. Paying During School
Too many veterinary students are making payments on student loans while they are in school and are still borrowing.
First, if you can afford to make payments on your student loans as a student, ask yourself where that payment money comes from.
Second, if you can afford to make payments on your student loans as a student, then you borrowed too much.
Expert Borrowing Tips:
Making Payments vs. Borrowing Less
- If you’re using federal Direct student loans to pay down other federal Direct student loans, you’re not gaining any ground. A better plan would be to borrow less.
- If the funds you’re using to make payments on your loans during school are coming from your veterinary school job or outside help, then borrow less.
Reduce your future loan awards or return loans that you received above your budgeted need to make the biggest impact on your balance. You have up to 120 days to return Direct Loan amounts that you might not need. When you return Direct Loans, the principal, interest, and fees are also returned. The loans you don’t borrow or the principal you return within the 120-day window will reduce your balance more than paying the interest while in school. To learn more, visit the VIN Foundation Borrow Better resource page.
If you are starting veterinary school this fall or returning next fall, use the VIN Foundation My Student Loans tool and In-School Loan Estimator to help you review your current student loans, interest rates, and project your graduation balance using this new interest rate information. For those of you who will be starting veterinary school this fall, the In-School Loan Estimator uses the new borrowing limits and allows you to enter private loan information as well.
If you already have student loans, here is a video tutorial on how to locate and download your student aid data file. These free tools help you account for loans you already have and help you estimate your total debt balance at graduation. You can even use the In-School Estimator to calculate how much you might save by returning unused student loans or reducing your future financial aid awards.
Less Expensive Borrowing Options
Health Professions Student Loans (HPSL) and Loans for Disadvantaged Students (LDS) are potential federal alternatives to Direct loans for veterinary school if they are available for your education program and if you are eligible to receive them.
HPSL and LDS have an interest rate of 5%, and they do not accumulate interest during school (subsidized loans). They can also be consolidated into a Direct Consolidation Loan after you finish veterinary school, making them eligible for income-driven repayment plans or Public Service Loan Forgiveness.
Ask your financial aid office if they offer HPSL or LDS and how to apply for them. Oftentimes, they require your parents’ financial information to determine your eligibility.
Federal Health Professions Student Loans for Veterinary School
Try to Avoid Private Student Loans for Veterinary School
With new borrowing limits, it will be more difficult to avoid private student loans to fund your veterinary education. Federal student loans are the most flexible and least risky debt you will ever have. Make sure you have maximized all federal student loan options before you consider any kind of private student loan for veterinary school.
Private student loans do not have the benefits, protections, and repayment options that come with your federal student loans. Even if you find private loans with a lower interest rate, the repayment options and hardship provisions will not be as beneficial compared to federal loans. Private student loans can even limit your career opportunities depending on the balance and deferment provisions.
We’re here to help!
Happy budgeting this spring, summer, and fall. An ounce of planning is worth a pound of interest saved in repayment. Please feel free to reach out with any questions: [email protected].
VIN Foundation is here to help with understanding your veterinary school borrowing and repayment options now or in the future!
Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.