Interest rates are going down for new Federal Direct Student Loans beginning on July 1, 2020.
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 0.700%, a huge decrease over last year’s high yield of 2.479%. As a result, borrowers with new loans for the 2020-2021 award year will be paying much less in finance charges over the life of their loan. You can read all about it here in a recent electronic announcement from FSA. Don’t forget to update your borrower communications and consumer information!

Interest Rates for Direct Loans First Disbursed Between July 1, 2020, and June 30, 2021

Undergraduate Students

  • Direct Subsidized Loan 2.75%
  • Direct Unsubsidized Loans 2.75%
  • Direct PLUS Loans 5.30%

Graduate & Professional Students

  • Direct Unsubsidized Loans 4.30%
  • Direct PLUS Loans 5.30%