On May 11th 2016, student loan interest rates were announced for the 2016-17 academic year (the lowest rates we’ve seen in a decade). As of July 1st these rates apply to any new student loans you take out and will be fixed over the life of those loans.
Loan types explained:
Direct Subsidized Loan (Undergraduate):
This type of loan is only available to undergraduates and is a need-based loan, meaning that to receive this loan you must demonstrate financial need. The government pays the interest on these loans, so those who receive Direct Subsidized loans are not charged interest while they are in school at least half-time or during periods of deferment.
2015-16 Interest Rate: 4.29%
Current Interest Rate (2016-17): 3.76%
Direct Unsubsidized Loan (Undergraduate):
Unsubsidized loans are not need-based, however unlike subsidized loans the interest will accrues throughout the life of the loan, including while you are in school. If you can manage it, help your future-self by paying your interest down while you’re in school. It will make repaying your loans much easier in the long term.
2015-16 Interest Rate: 4.29%
Current Interest Rate (2016-17): 3.76%
Direct Unsubsidized Loans (Graduate):
Unsubsidized loans are also available to graduate students and are not based on financial need. As with unsubsidized loans for undergraduates, interest will begin to accumulate from the moment the loan is disbursed and will continue until the loan is paid back in full.
2015-16 Interest Rate: 5.84%
Current Interest Rate (2016-17): 5.31%
Direct PLUS Loans (Graduate & Parents):
PLUS loans allow graduate students and parents of students the opportunity to borrow up to the total cost of attending college. Since these loans are not based on financial need, interest does accrue on the loans from the moment they are disbursed. Unlike many other federal student loans, PLUS loan eligibility is based in part on the borrower’s credit and may not be available to some applicants.
2015-16 Interest Rate: 6.84%
Current Interest Rate (2016-17): 6.31%
Want to learn more about student loan interest rates, borrowing, and repayment? Log into your iontuition.com account, where you’ll get a complete breakdown of your student loans that includes daily interest accrual, repayment status, and loan type.