Legislation Passed Decreasing Federal Direct Loan Interest Rates
Congress has passed a new law, called the the Bipartisan Student Loan Certainty Act of 2013, which ties Federal Direct Loan interest rates to the financial market. This new Act has lowered interest rates for the 2013-14 academic year for Stafford, Graduate PLUS, and Parent PLUS Loans.
The new Direct Loan interest rates are fixed for the life of the loan at:
- 3.86% for Subsidized & Unsubsidized Stafford Loans for undergraduate students
- 5.41% for Unsubsidized Stafford Loans for graduate students
- 6.41% for Parent PLUS and Graduate PLUS Loans
The interest rates are effective beginning with the 2013 Summer Sessions for loans first disbursed on or after July 1, 2013. The rates will apply even to loans that already disbursed this summer prior to the Act being signed into law. The Department of Education is working with federal loan servicers to ensure that the new interest rate is retroactively applied to loans disbursed after July 1, 2013.
Under the new Act, interest rates are calculated using the 10-year Treasury Note Index as a base plus add-on amounts for each loan program. Interest rates will be determined each June for new loans in the upcoming award year and will be fixed for the life of the loan. The new Act also addresses interest rate caps for each loan program.