Current Federal Student Loan Rates
Federal student loan rates can be difficult to understand, mainly because each loan offered by the U.S. Department of Education works in a different way with different rules, and the rates can change dramatically from year to year. As a result, a student who relies on federal loans to finance an education might graduate from school with six, eight or even 10 loans, and they might all have different interest rates.
In general, it’s best to keep track of all loan documents and keep good notes during the signing process, as this will help students to keep track of the final cost of each and every loan they have. But these notes about the federal rates for 2015-2016 might be helpful for people who are planning to get new loans in the future.
- Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduates: 4.29 percent
- Direct Unsubsidized Loans for graduate students: 5.84 percent
- Direct PLUS Loans: 6.84 percent
- Perkins Loans: 5 percent
All of these interest rates are determined by federal law, not by the servicers that might administer these loans. That’s an important point, as students who hope to call their loan servicers to get a better deal might find that their efforts are quickly thwarted. Unless the law changes, federal loan rates are tied to the health of the stock market, and they cannot be changed by individual banks or servicers.
In most cases, the loans students obtain from federal sources come with a fixed interest rate. This means that the amount of money a student will be asked to pay in interest fees won’t move up or down during the life of the loan. But, as mentioned, students often graduate with many different loans with many different fees. Consolidating them into one federal loan isn’t always a great idea, as an article produced by US News and World Report points out, as consolidated loans use an interest rate generated by the average of all of the loans. In the end, some students might pay more.
In addition, students who skip their payments or otherwise fall behind on their obligations may be subject to collection costs and penalties that increase the overall cost of the loan. This is another detail students should be sure to attend to when they sign up for a federal student loan.
If you’d like to reduce the overall amount of money you’ll need to borrow for school, we can help. Visit our “Scholarship Center” to look for grants and scholarships that can help you to pay for school without signing up for long-term debt. You can search by your school, so you’ll only see programs that will work for your education experience, and we’ll help you to apply for those programs too. Just click to get started.