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NEW INTEREST RATES

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%

 

NEXT GEN FSA ADDS NEW FEATURES TO AID WEBSITE

COVID-19 hasn’t slowed progress on FSA’s Next Gen FSA initiative. Last month they introduced additional features on StudentAid.gov to promote financial literacy and additional self-service tools for students and borrowers. Among the features are the Annual Student Loan Acknowledgment, a new Feedback Center where users can submit complaints and report issues, and a status center where users can find updates on their cases. The Student Aid website now has enhanced loan simulators to help borrowers evaluate their options, redesigned Direct Loan Master Promissory Note Updates and Notification center enhancements. FSA ID enhancements were also made to help ensure applicants have all the information they need to create one. According to FSA’s recent electronic announcement, more tools and features will be coming throughout the year.

REVISED MASTER PROMISSORY NOTES FOR DIRECT LOANS

The Office of Management and Budget approved revised versions of the Master Promissory Notes for Direct Subsidized, Unsubsidized and Direct PLUS loans. The new MPN’s available in paper format expire on July 31, 2022.  The Plain Language Disclosures have also been updated.

Federal Student Aid made these available on StudentAid.gov on April 26, 2020 and provided guidance for schools who wish to print and use the paper versions.

UPDATE ON FEDERAL WORK STUDY COMMUNITY SERVICE WAIVERS RELATED TO COVID-19

Schools participating in the Federal Work Study Program are required to spend at least 7% of their federal FWs share to pay wages for students working in community service positions each award year. In meeting this requirement, at least one or more of the school’s FWS students must be employed as a reading tutor for children in a reading tutoring project or performing family literacy activities in a family literacy project. FSA announced that is waiving these requirements for the 2019-2020, and 2020-2021 award years, pending publication of notice in the federal register.