Sources
We compiled the data presented in this article from the US Department of Education. We also referenced historical details presented in New America Foundation’s 2012 report on the history and cost of federal student loans.
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Federal student loan interest rates by year
How the recession and changes to federal programs affected rates from 2006 to 2019.
Every borrower gets the same interest rate when they take out a federal student loan. Currently, Congress sets new rates each year that take effect on July 1st and last until June 30th.
Economic factors like the recession caused some interest rates to drop and rebound. And the introduction of the Direct Loan Program and phasing out of the Federal Family Education Loan Program also affected the cost of federal student loans.
What are the historical rates for Direct Subsidized and Subsidized Federal Stafford Loans?
| Year | Interest rate for undergraduate students | Interest rate for graduate and professional students |
|---|---|---|
| 2006–2007 | 6.8% | 6.8% |
| 2007–2008 | 6.8% | 6.8% |
| 2008–2009 | 6% | 6.8% |
| 2009–2010 | 5.6% | 6.8% |
| 2010–2011 | 4.5% | 6.8% |
| 2011–2012 | 3.4% | 6.8% |
| 2012–2013 | 3.4% | – |
| 2013–2014 | 3.86% | – |
| 2014–2015 | 4.66% | – |
| 2015–2016 | 4.29% | – |
| 2016–2017 | 3.76% | – |
| 2017–2018 | 4.45% | – |
| 2018–2019 | 5.05% | – |
| 2019–2020 | 4.53% | – |
Unsubsidized loans are often the best deal you can get as a student. The Department of Education (DoE) covers the interest that adds up while these loans are in deferment, and they generally have the lowest rates of any other loans. But there’s an annual and lifetime limit to how much students can borrow.
Two main events affected these rates outside of the recession. The DoE phased out the Federal Family Education Loan Program in 2010 with the passage of the Health Care and Education Reconciliation Act, which included Subsidized Federal Stafford Loans. And it phased out Direct Subsidized Loans for graduate students with the passage of the Budget Control Act of 2011.
What are the historical rates for Direct Unsubsidized and Unsubsidized Federal Stafford Loans?
| Year | Interest rate for undergraduate students | Interest rate for graduate and professional students |
|---|---|---|
| 2006–2007 | 6.8% | 6.8% |
| 2007–2008 | 6.8% | 6.8% |
| 2008–2009 | 6.8% | 6.8% |
| 2009–2010 | 6.8% | 6.8% |
| 2010–2011 | 6.8% | 6.8% |
| 2011–2012 | 6.8% | 6.8% |
| 2012–2013 | 6.8% | 6.8% |
| 2013–2014 | 3.86% | 5.41% |
| 2014–2015 | 4.66% | 6.21% |
| 2015–2016 | 4.29% | 5.84% |
| 2016–2017 | 3.76% | 5.31% |
| 2017–2018 | 4.45% | 6% |
| 2018–2019 | 5.05% | 6.6% |
| 2019–2020 | 4.53% | 6.08% |
Unsubsidized loans are currently the second-best deal for undergraduate and graduate students when it comes to low interest rates. But unlike with subsidized loans, the DoE doesn’t pay off the interest that adds up during deferment. Instead, that interest is capitalized and added to your loan balance once repayments begin. There’s also a limit to how much students can borrow, though it’s higher than the subsidized limit.
Federal student loan interest rates were fixed at 6.8% from 2006 to 2013. After that, the Bipartisan Student Loan Certainty Act took effect, which affected unsubsidized loans. This new law set student loan interest rates at the high-yield 10-year Treasury note plus 2.05% for undergraduates and 3.6% for graduate students.
What are the historical rates for Direct PLUS Loans?
| Year | Interest rate for graduate students, professional students and parents |
|---|---|
| 2006–2007 | 7.9% |
| 2007–2008 | 7.9% |
| 2008–2009 | 7.9% |
| 2009–2010 | 7.9% |
| 2010–2011 | 7.9% |
| 2011–2012 | 7.9% |
| 2012–2013 | 7.9% |
| 2013–2014 | 6.41% |
| 2014–2015 | 7.21% |
| 2015–2016 | 6.84% |
| 2016–2017 | 6.31% |
| 2017–2018 | 7% |
| 2018–2019 | 7.6% |
| 2019–2020 | 7.08% |
Direct PLUS Loans are available to graduate and professional students as well as parent borrowers. There’s no limit to how much you can borrow, though rates are generally higher than other loans.
The changes that affected unsubsidized loans also impacted Direct PLUS Loans. Interest rates were fixed at 7.9% from 2006 to 2013 until the Bipartisan Student Loan Certainty Act came around. After that, Congress set rates to the high-yield 10-year Treasury note plus 4.6%.
Interest rates for Federal PLUS and Perkins Loans
Both Federal PLUS and Perkins Loans are no longer available. They held the same rates until the end of their programs:
- Federal PLUS Loan rate — 8.5%
- Perkins Loan rate — 5%
Federal PLUS Loans were part of the FFEL Loan Program that ended in 2010. Perkins Loans were designed as a low-interest option for low-income undergraduate and graduate students and included a forgiveness program. These haven’t been available since 2017.
Timeline of federal student loan interest rates
Federal student loan interest rates have changed a lot over the past few decades. Here’s a timeline of the major changes from 1965 to present day.
- 1965 to 1988: Congress establishes the FFEL Program, which offers student loans issued by private lenders and guaranteed by the DoE. Rates are set at 6%.
- 1988 to 1992: Congress changes rates to 10% for federally backed student loans.
- 1992: Congress creates a direct-lending pilot program, where the DoE directly funds loans rather than going through a third-party lender. This introduces variable-rate student loans that are based on the short-term US Treasury note plus 3.1%. Congress caps rates at 9%.
- 1993: The Student Loan Reform Act officially establishes the Direct Loan Program, which eventually replaces the government-guaranteed model. This ties variable student loan interest rates to the long-term Treasury note. Congress schedules a 1% interest rate increase for 1998.
- 1998: The majority of students still take out FFEL Loans — not Direct Loans. Concerned that private lenders will drop out of the FFEL Program if it keeps the current interest rate formula, Congress fixes student loan interest rates at the short-term Treasury note plus 2.3% until 2003 to keep banks from leaving the program.
- 2001: Congress passes a bill to fix interest rates at 6.8% for subsidized and unsubsidized loans issued after July 1, 2006, keeping the same variable-rate formula until that time. This replaces the scheduled 2003 variable interest rate change.
- 2006: The fixed rate of 6.8% takes effect on all subsidized and unsubsidized loans.
- 2010: Congress ends the FFEL Loan Program, and the DoE begins issuing all federal loans itself.
- 2013: Congress passes the Bipartisan Student Loan Certainty Act, which ties unsubsidized and PLUS Loans to the high-yield 10-year Treasury note.
- 2017: Congress ends the Perkins Loan Program.
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