Interest Rates - Federal Student Loans
President Obama signed The Bipartisan Student Loan Certainty Act of 2013 on August 9. 2013.
This bill has a retroactive effective date of July 1, 2013.
For the 2013-2014 academic year:
- Undergraduates students, under both subsidized and unsubsidized Direct loan programs,will borrow at 3.86;Graduate students(who can only receive unsubsidized loans) will be charged at 5.41% interest.
- The interest rate for PLUS and GRAD PLUS Loans will be 6.41%
- All rates are tied to the 10-year Treasury note
- The 6.8% interest rate that kicked in on July 1, 2013 is eliminated, and allloans made after July 1, will be retroactively changed to the 3.9%.
- There are interest rate caps in place for these loans to protect consumers:
- 8.25% for all undergraduate Stafford loans;
- 9.5% for graduate student loans;
- 10.5% on PLUS (parent) loans.
- 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 Federal Direct PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed at 7.90
- Interest rates on existing loans are not affected and will remain the same
How Interest Rates Have Been Set
President Bush signed The College Cost Reduction and Access Act (H.R. 2669) into law on Sept. 27, 2007.The bill gradually cut interest rates on subsidized Stafford loans for undergraduate students in between the 2008-2009 and the 2011-2012 academic years. Congress failed to extend these cuts by July 1, 2013. Therefore, the interest rate jumped back to a fixed rate of 6.8% for all undergraduate students who will borrow under the subsidized Stafford,loan program effective July 1, 2013.
for the Stafford Loan Program
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:
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.
Updated August 13, 2013