Federal Loan Rates

Federal Stafford Loan Interest Rates and Limits

On February 8, 2006, President Bush signed The Deficit Reduction Act of 2005 into law. This legislation makes a number of changes in the federal student loan programs including:

  • For new Stafford student loans disbursed July 1, 2006 and later, the interest rate will be set at a FIXED RATE of 6.8 %;
  • For PLUS and Grad PLUS Loans disbursed July 1, 2006 and later, the interest rate will be set at a FIXED RATE of 8.5%;
  • Interest rates on existing loans are not affected and will remain the same

President Bush signed The College Cost Reduction and Access Act (H.R. 2669) into law on Sept. 27, 2007. The bill gradually cuts interest rates on subsidized Stafford loans for undergraduate students in half according to the following schedule:

  • 6 percent for loans first disbursed July 1, 2008 to July 1, 2009
  • 5.6 percent for loans first disbursed July 1, 2009 to July 1, 2010
  • 4.5 percent for loans first disbursed July 1, 2010 to July 1, 2011
  • 3.4 percent for loans first disbursed July 1, 2011 to July 1, 2012

The Ensuring Continued Access to Student Loans Act of 2008 ("ECASLA") was originally approved by the House of Representatives on April 17, 2008. President Bush signed it into law on May 7, 2008.& The legislation set new undergraduate Stafford loan limits effective July 1, 2008.

Federal PLUS Loan Interest Rates

PLUS loans are available to parents of dependent undergraduate students. Families do not need to complete the FAFSA to apply for a PLUS loan. (Grad PLUS Loans are available to Graduate and Professional Students starting on July 1, 2006).

  • For PLUS and Grad PLUS Loans disbursed July 1, 2006 and later, the interest rate will be set at a FIXED RATE of 8.5%.

Understanding the Rate Changes

U.S. PIRG, the federation of state Public Interest Research Groups (PIRGs), takes on powerful interests on behalf of the American public, working to win concrete results for our health and our well-being. They released An Analysis of the College Cost Reduction and Access Act of 2007 Interest Rate Reduction in June 2008.

Updated February 4, 2009