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.
| 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.
| 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.
| 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%.
Both Federal PLUS and Perkins Loans are no longer available. They held the same rates until the end of their programs:
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.
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.
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.
Get the most out of financial aid by submitting this along with the FAFSA.
Find out what information you’ll need before sitting down to complete the form.
This forgiveness program cancels your debt if your school broke the law.
What to expect from this popular undergraduate and graduate loan program.
Cancel your federal debt if you never earned that degree.
The 5 steps you need to take before federal repayments begin.
You might not have to pay off the rest of that debt after all.
A step-by-step guide — with pictures — on how to apply for PSLF.
A step-by-step guide with pictures for filling out your federal student aid application.