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.

Sequester Changes and Operational Guidance for Direct Loan Fee Change

As has been the case for the last few years, Sequester changes kick in beginning on October 1, 2016; the start of the Federal Government’s Fiscal Year. These changes impact loan origination fees in the Direct loan program and make reductions to the Iraq-Afghanistan Service Grant and Teach Grant programs where the first disbursement is made on or after 10/1/2016. I summarized this below for you Continue reading Sequester Changes and Operational Guidance for Direct Loan Fee Change

IRS Warns of Latest Scam

The IRS issued a warning to taxpayers about bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.”

Even though the tax deadline has come and gone, scammers continue to use varied strategies to trick people, in this case students. In this newest twist, they try to convince people to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.

“These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,” said IRS Commissioner John Koskinen. “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money. http://1.usa.gov/1WquZ7y