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New Rules Govern Federal Loans


Each year interest rates are established for all of the Federal Direct Loan types. These interest rates are attached to federal loans disbursed on or after July 1 of a given year and before July 1 of the following year. While one particular year’s rates may be different from another year, the rates attached to federal student loans each individual year are fixed and will not change during the life of the loan. The chart below shows the current 2013-2014 interest rates and the new 2014-2015 interest rates for Federal Direct Student Loans first disbursed on or after July 1, 2014 and before July 1, 2015:

Loan Type Borrower Type 13-14 Interest Rates New 14-15 Interest Rates
Direct Subsidized Loans Undergraduate Students 3.86% 4.66%
Direct Unsubsidized Loans Undergraduate Students 3.86% 4.66%
Direct Unsubsidized Loans Graduate/Professional Students 5.41% 6.21%
Direct PLUS Loans Graduate/Professional Students 6.41% 7.21%
Direct PLUS Loans Parents of Dependent Undergraduate Students 6.41% 7.21%

The origination fees have not yet changed and are currently 1.04% to 1.051% for Stafford Loans; 4% for PLUS loans. Note that interest on subsidized loans does not accrue until students graduate or fall below half-time enrollment. For the most up-to-date information on eligibility, visit Federal Student Aid.

In addition, eligibility for Direct Subsidized Loans is limited to 150% of the student's published degree program for new borrowers after July 1, 2013. For example, a student completing a 4-year bachelor's degree program will only be eligible to receive the subsidized loan for six years at maximum. This rule only applies to new borrowers who receive their first Stafford loan disbursement on or after July 1, 2013. Students in this category will still qualify for unsubsidized loans up to their lifetime borrowing aggregate amount, if all other eligibility requirements are met. More information about the 150% subsidy limit can be found here.


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