NAICU Washington Update

Student Loan Interest Rates Set to Rise

May 24, 2017

Interest rates on all federally-issued Direct Loans will increase by 69 basis points on July 1, 2017. The interest rate schedule from the 2017-18 academic year is as follows:

  • Stafford Loans (undergraduate students): 4.45% from 3.76%

  • Stafford Loans (graduate students): 6.00% from 5.31%

  • PLUS Loans (Grad and Parent): 7.00% from 6.31%

Loans issued under the Direct Loan program will carry a different interest rate depending on the academic year in which the loan was issued. For example, an undergraduate student entering her or his fourth year of study in 2017-18, and having taken out a loan each year, would have the following interest rates on their Stafford Loans

  • 2014-15: 4.66%

  • 2015-16: 4.29%

  • 2016-17: 3.76%

  • 2017-18: 4.45%

Once issued, the interest for each loan is fixed and does not fluctuate based on market conditions. 

For each academic year, the borrower is essentially taking out a new loan with new terms. Therefore, a student who borrows for the entire length of their course of study is likely to have different loan terms for each year in which they attend school. 

Should the yield on 10-year Treasury notes continue to rise in future years, the interest rates will eventually be capped. Undergraduate Stafford Loans will be capped at 8.25%, graduate Stafford Loans at 9.5%, and Grad/Parent PLUS Loans at 10.5%. 

The rates for the 2018-19 academic year will be recalculated in May 2018,based on market conditions. 

MORE News from NAICU