DIRECT LOAN INTEREST RATES EFFECTIVE JULY 1, 2017

Direct Loan interest rates jumped for the first time in several years.

Direct Loan interest rates jumped for the first time in several years. Direct Loan interest rates have been trending downward over the last few years but it was only a few short years ago that Subsidized and Unsubsidized Direct Loans carried a fixed interest rate of more than 4%. All things considered, the new interest rate, although an increase from last year’s rates is still close to historic lows. The Federal Direct Loan Program is still a winner for students with lower interest rates and more favorable repayment terms than loans from private lenders.

Interest rates for Direct Loans are based on a formula whereby the rates are indexed to the 10-Year Treasury Note plus an “add-on” percentage. This year’s auction of the 10-year Treasury note resulted in a “high yield” of 2.400%, thus the reason or the spike. You can read all about it here in a recent Electronic Announcement from Federal Student Aid.

The Interest Rates for loans where the first disbursement is made on or after July 1, 2017, and before June 30, 2018 are:

Undergraduate Students

  • Direct Subsidized loans 4.45%
  • Direct Unsubsidized Loans 4.45%
  • Direct PLUS Loans (All Borrowers) 7.00%

Graduate/Professional Students

  • Direct Unsubsidized Loans 6.00%
  • Direct PLUS Loans (All Borrowers) 7.00%

 


This post first appeared in our July 2017 Newsletter. Click the link below to sign up.