School Loan Interest Rates

loan calculatorSchool loan interest rates may vary for different students depending on whether they have taken a federal or a private student loan. Typically, private loans have higher interest rates as compared to federal loans, which have lower, fixed interest rates applicable to all students. Interest rates may also vary according to the repayment plan a student chooses. Also, even though interest rates are fixed for federal loans, they vary for each type of federal loan.

Current Student Loans Interest Rates

In 2012, Congress reduced interest rates for federal loans disbursed between July 1, 2012 and June 30, 2013. Current federal student loan rates are as follows:

Since interest rates for private loans are entirely at the discretion of your lender, there are no fixed statistics for private school loans interest rates.

Calculating Your Accumulated Interest Rate

You can calculate the amount of interest that has accumulated on your loan by using a simple formula, which includes multiplying your remaining loan amount with the number of days since you made the last payment and the interest rate factor. The interest rate factor is basically your interest rate divided by the number of days in a year.

Interest Rates and Repayment Plans

Your school loan interest rate may be constant, but the total amount of interest that you may end up paying will depend on the repayment plan you choose. For instance, if you have borrowed a Direct PLUS federal loan of $50,000 (with a fixed interest rate of 7.9%), you will pay the following amounts according to the repayment plan chosen by you:

Standard Repayment Plan

  • Total Loan Payment: $72,480
  • Total Interest Payment: $22,480

Extended (Fixed) Repayment Plan

  • Total Loan Payment: $11,4780
  • Total Interest Payment: $64,780

For more information on your school loan interest rates, use our loan comparison tool. This will not only provide you with the required information but also help you choose the loan and the repayment plan that suits you best.

 

Miscellaneous Student Loan Topics