Student Loan Rates and Rules

Student Loan Interest Rates

A Stafford student loan interest rate is fixed at 6.8% as of July 1, 2006. The interest rate on Stafford loans first disbursed on or after July 1, 1998 but before June 30, 2006 is variable and may change on July 1 of each year. This rate will never exceed 8.25% though. The rate is based on the following three keys.

  1. The 91-day T-bill rate + 1.70% during in-school, grace, and deferment periods.
  2. The 91-day T-bill rate + 2.30% during repayment periods.
  3. The current student loan interest rate on Stafford loans first disbursed on or after July 1, 1998 but before June 30, 2006 is 7.22% in repayment and 6.62% during in-school, grace, and deferment periods.

PLUS Student Loan Interest Rates

  1. The interest rate on PLUS loans first disbursed beginning July 1, 2006 is fixed at 8.5%.
  2. The interest rate on PLUS loans first disbursed on or after July 1, 1998 but before June 30, 2006 is variable and may change annually on July 1 but will never exceed 9%. The current interest rate on these variable rate PLUS loans is 8.02%.

Federal Student Loan Consolidation

  1. The fixed Student loan interest rate for consolidation loans varies from borrower to borrower but is generally expected to range from 4.75% to 6.125%. Interest rates are based on the borrower’s underlying loans’ primary rates and do not include discounts for interest reduction benefits. Special rules apply to consolidation loans that include HEAL loans.
  2. Different interest rates apply to federal Stafford, PLUS, and consolidation loans issued before July 1, 1998.

Private Student Loans

The actual rate and fees vary from loan to loan and depend on the school you attend and the credit history.

Disbursement fees are added to the loan amount, and all repayment fees are added to the loan amount when repayment begins. The Prime Rate for December 2007 is 7.5%.