Loan Interest Rates and Fees
Direct Loans and FFEL Program loans first disbursed on or after July 1, 2006 offer a fixed interest rate. Note: Effective July 1, 2010, the only available loans are Direct Loans.
Fixed Rate for Loans First Disbursed Between
Subsidized Loans for Undergraduate Students
Unsubsidized Loans for All Students
Unsubsidized Loans for Graduate and Professional Students
PLUS Loans (Direct Loan)
Note: Loans first disbursed on or after July 1, 2006, the interest rate on all Stafford loans in both the FFEL and Direct Loan Program was fixed at 6.8 percent. That rate continues to apply to all unsubsidized Stafford Loans and to subsidized Stafford Loans for graduate and professional students. Starting with loans first disbursed between July 1, 2008 and June 30, 2009, the interest rate on subsidized Stafford Loans for undergraduate students was reduced to 6.0 percent, with additional reductions each year through June 30, 2012.
What is Interest?
Interest is a fee an individual pays for the use of borrowed funds. When individuals enter repayment, they pay not only the principal (amount originally borrowed), but also any additional interest fee on that borrowed money.
When Does Interest Accrue?
Interest accrues on student loans (unsubsidized loans & plus loans):
- every single day, from the day the loan is disbursed until the very last payment is made.
- even if the account is not in repayment.
Interest does not accrue on student loans:
- during the inschool grace period for subsidized Stafford loans.
- when the loan(s) is in an approved period of deferment for subsidized Stafford/subsidized consolidation loans. In this instance, the government pays the interest on the loan(s).
Benefits of Paying Interest
When a borrower makes payments on the interest, it can minimize the amount of interest that will capitalize (be added to your current principal balance) when the account enters repayment. If less or no interest is added to the original loan amount, the borrower's monthly payment will be less.
What is an Interest Notice?
An interest notice is an account summary that details the interest accrued on a student loan(s) during a certain period of time. A borrower will receive an interest notice - instead of a bill - if the student loan(s) is in deferment, forbearance, grace or inschool status. An interest notice differs from a bill because you're not required to make a payment.
NOTE: Effective for loans first disbursed on or after July 1, 2012.
- The law eliminates the authority of the Department of Education to offer any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fee. As a result, the up-front interest rebate that has been provided to Direct Loan borrowers at the time of loan disbursement will not be offered on any Direct Loan with a first disbursement date that is on or after July 1, 2012.
- Students who receive subsidized Stafford loans on and after July 1, 2012, and prior to July 1, 2014, must temporarily pay interest that accrues during the six months grace period provided the students are no longer enrolled on at least a half-time basis. If not paid, the accrued interest will be capitalized (added to the principal balance on the loan).
Loan Fees Charged
Stafford Loans In addition to interest, there is a loan origination fee that is a percentage of the principal amount of each Direct Loan that is received. This fee helps reduce the cost of making these low-interest loans and is deducted before the borrower receives any loan money. The loan amount a borrower actually receives will be less than the amount the borrower will have to repay due to the fee being charged.
1.0 percent origination fee
PLUS and Graduate PLUS Loans In addition to interest, there is a loan origination fee that is a percentage of the principal amount of each Direct Loan that is received. This fee helps reduce the cost of making these low-interest loans and is deducted before the borrower receives any loan money. The loan amount a borrower actually receives will be less than the amount the borrower will have to repay due to the fee being charged.
4.0 percent origination fee
Below are some additional web sites to help you locate further information on the Federal Direct Loan Program.