Understand how interest is calculated and what fees are associated with your federal student loan.

Remember, you may find that interest rates and fees are lower for federal student loans than private student loans.

Interest Rates and Fees

If you receive a federal student loan, you will be required to repay that loan with interest.  It is important that you understand how interest is calculated and the fees associated with your loan.  Both of these factors will impact the amount you will be required to repay. 

Learn how the automatic federal budget cuts, known as the “sequester,” will affect your Direct Loan fees.

What is interest?
What are the interest rates for federal student loans?
Who sets interest rates for federal student loans?
How is interest calculated?
What is the interest rate factor?
How can I determine how much of my payment will go toward my outstanding principal balance?
Are there any other fees for federal student loans?
What are the interest rates on federal student loans first disbursed prior to July 1, 2013?


What is interest?

Interest is money paid to the lender in exchange for borrowing money. Interest is calculated as a percentage of the unpaid principal amount (loan amount) borrowed. 

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What are the interest rates for federal student loans?

The following table provides interest rates for each type of federal student loan.

Loan Interest Rates by Disbursement Dates

Loan Type

First Disbursed between July 1, 2013, and June 30, 2014

Direct Subsidized Loans (Undergraduate Students)

Fixed at 3.86%

 

Direct Unsubsidized Loans (Undergraduate Students)

Fixed at 3.86%

 

Direct Unsubsidized Loans (Graduate or Professional Students)

Fixed at 5.41%

Direct PLUS Loans (Parents and Graduate or Professional Students)

Fixed at 6.41%

 

Perkins Loans (Undergraduate and Graduate or Professional Students)

Fixed at 5%

 

Note: The interest rates for federal student loans are determined by federal law. If there are future changes to federal law that affect federal student loan interest rates, we will update this page to reflect those changes.

View the interest rates on federal student loans first disbursed before July 1, 2013.

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Who sets interest rates for federal student loans?

Interest rates on federal student loans are set by Congress.

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How is interest calculated?

The amount of interest that accrues (accumulates) on your loan from month to month is determined by a simple daily interest formula. This formula consists of multiplying your loan balance by the number of days since the last payment times the interest rate factor.

Simple daily interest formula:

Outstanding principal balance
x number of days since last payment
x interest rate factor
= interest amount

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What is the interest rate factor?

The interest rate factor is used to calculate the amount of interest that accrues on your loan. It is determined by dividing your loan's interest rate by the number of days in the year.

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How can I determine how much of my payment will go toward my outstanding principal balance?

Your loan servicer can tell you how much of your payment is applied to your principal balance. Find out more about loan servicers.

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Are there any other fees for federal student loans?

Most federal student loans have loan fees that are deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.

Here are the loan fees for federal student loans first disbursed on or after Dec. 1, 2013:

  • 1.072% for Direct Subsidized Loans and Direct Unsubsidized Loans
  • 4.288% for Direct PLUS Loans for parents and graduate and professional students

Loans first disbursed prior to Dec. 1, 2013, have different loan fees.

There are no loan fees for Perkins Loans.

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What are the interest rates on federal student loans first disbursed prior to July 1, 2013?

The following table provides interest rates for each type of federal student loan first disbursed prior to July 1, 2013. 

 

Loan Interest Rates by Disbursement Dates

Loan Type

First Disbursed Between July 1, 1998, and June 30, 2006

First Disbursed Between July 1, 2006, and June 30, 2013

Direct Subsidized Loans and Subsidized Federal Stafford Loans (Undergraduate Students)

The interest rate is variable (adjusted annually on July 1st) and will not exceed 8.25%.

Between 7/1/13 and 6/30/14, loans in repayment or forbearance have an interest rate of 2.35%, and loans in an in-school, grace, or deferment period have a lower rate of 1.75%.

7/1/06–6/30/08: Fixed at 6.8%

7/1/086/30/09: Fixed at 6.0%

7/1/096/30/10: Fixed at 5.6%

7/1/106/30/11: Fixed at 4.5%

7/1/116/30/13: Fixed at 3.4%

Direct Subsidized Loans and Subsidized Federal Stafford Loans (Graduate Students)

and

Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans (Undergraduate and Graduate or Professional Students)

Fixed at 6.8%

Direct PLUS Loans
(Parents and
Graduate or
Professional
Students)

The interest rate is variable (adjusted annually on July 1st) and will not exceed 9.0%.

Between 7/1/13 and 6/30/14, the interest rate on these loans is 3.15%.

Fixed at 7.9%

FFEL PLUS Loans
(Parents and
Graduate or Professional
Students)

Fixed at 8.5%

Note:  As of July 1, 2012, graduate or professional students are no longer eligible to receive subsidized loans.  In addition, no new FFEL Program loans have been made since July 1, 2010. 

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