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Interest Rates on Federal Student Loans Will Drop
Millions of students and families will now pay less to borrow money from the federal government to finance college in the coming academic year.
Interest rates on federal student loans are set to drop by more than one-third of a percentage point following the U.S. Treasury’s sale on Wednesday of 10-year notes. Rates are reset each year based on the yield of the note set by that auction.
The interest rate on new loans for undergraduate students will drop to 4.29 percent from the current 4.66 percent. The cost of new direct loans for graduate students will fall to 5.84 percent from 6.21 percent.
Rates on PLUS loans for graduate students or parents paying their children’s college costs will also tick down to 6.84 percent from 7.21 percent.
The new interest rates for the 2015-16 academic year take effect on July 1. The changes do not affect borrowers with older loans.
|
|
Current Rate 2014-15 |
New Rate 2015-16 |
|
Undergrad Direct Loans Subsidized & Unsubsidized |
4.66% |
4.29% |
|
Graduate Direct Loans |
6.21% |
5.84% |
|
PLUS Loans Grad PLUS & Parent PLUS |
7.21% |
6.84% |
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Michael Stratford
Michael Stratford, Reporter, covers federal policy for Inside Higher Ed. He joined the publication in August 2013 after a stint covering the Arkansas state legislature for The Associated Press. He previously worked and interned at Kiplinger’s Personal Finance magazine and The Chronicle of Higher Education. At The Chronicle, he wrote about federal policy and covered higher education issues in the 2012 elections. Michael grew up in Belmont, Mass. and graduated from Cornell University, where he was managing editor of The Cornell Daily Sun.
Follow him on Twitter: twitter.com/mstratford.
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