Variable interest rate loans
Federal Stafford and PLUS loans first disbursed before July 1, 2006 are variable. Rates on variable-rate federal education loans are adjusted annually on July 1. The rates are calculated using formulas tied to yields paid by short-term Treasury securities in late May and June. Under the Federal Family Education Loan Program (FFELP), the formula rates are maximums; lenders may offer lower rates to borrowers.
Rates on subsidized Stafford loans for undergraduate students are fixed at 6% for loans first disbursed July 1, 2008–June 30, 2009.
Rates on unsubsidized Stafford loans for undergraduates and subsidized and unsubsidized Stafford loans for graduate students are fixed at 6.8%. |
Federal Stafford loans first disbursed July 1, 1998–June 30, 2006 whose borrowers are (1) in school, (2) in the post-school grace period, or (3) in authorized deferment.
Formula: Bond-equivalent rate for 91-day T-bills plus 1.7%, not to exceed 8.25%. |
3.61% |
Federal Stafford loans first disbursed on or after July 1, 1998 whose borrowers are in repayment (except during deferment).
Formula: Bond-equivalent rate for 91-day T-bills plus 2.3%, not to exceed 8.25%. |
4.21% |
Federal Stafford loans first disbursed July 1, 1995–June 30, 1998 whose borrowers are (1) in school, (2) in the post-school grace period, or (3) in authorized deferment.
Formula: Bond-equivalent rate for 91-day T-bills plus 2.5%, not to exceed 8.25%. |
4.41% |
Federal Stafford loans first disbursed July 1, 1995–June 30, 1998 whose borrowers are in repayment (except during deferment).
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed 8.25%. |
5.01% |
Federal Stafford loans first disbursed July 1, 1994–June 30, 1995.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed 8.25%. |
5.01% |
Federal Stafford loans first disbursed October 1, 1992–June 30, 1994 to new borrowers.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed 9%. |
5.01% |
Federal Stafford loans first disbursed July 23, 1992–June 30, 1994 to borrowers with existing fixed-rate FFELP loans.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed the original fixed rate of 7%, 8%, 9%, or 8/10%. |
5.01%
(7% cap)
5.01%
(8% cap)
5.01%
(9% cap)
5.01%
(10% cap) |
Federal Stafford loans first disbursed before July 23, 1992 at 8/10% and Federal Stafford loans first disbursed on or after July 23, 1992 to new borrowers at 8/10%. The fixed 8/10% rate converts to a variable rate following the 48th month of repayment.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.25%, not to exceed 10%. |
5.01% |
| Federal PLUS loans first disbursed on or after July 1, 2006 have a fixed interest rate equal to 8.50%. |
Federal PLUS loans first disbursed July 1, 1998–June 30, 2006.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed 9%. |
5.01% |
Federal PLUS loans first disbursed July 1, 1994–June 30, 1998.
Formula: One-year constant maturity Treasury yield plus 3.1%, not to exceed 9%. |
5.67% |
Federal PLUS/Federal SLS loans first disbursed October 1, 1992–June 30, 1994.
Formula: One-year constant maturity Treasury yield plus 3.1%, not to exceed 10% for Federal PLUS loans or 11% for Federal SLS loans. |
5.67% |
Federal PLUS/Federal SLS loans first disbursed July 1, 1987–September 30, 1992.
Formula: One-year constant maturity Treasury yield plus 3.25%, not to exceed 12%. |
5.67% |
Federal consolidation loans for which the application was received by the lender on or after October 1, 1998.
Formula: Weighted-average rate of loans being consolidated rounded up to the nearest 0.125%, not to exceed 8.25%. A different rate may apply to any HEAL loans included in the Consolidation loan.*** |
Fixed rate varies from borrower to borrower. |
|
Federal consolidation loans for which the application was received by the lender November 13, 1997–September 30, 1998.
Formula: Bond-equivalent rate for 91-day T-bills plus 3.1%, not to exceed 8.25%. A different rate may apply to any HEAL loans included in the Consolidation loan.*** |
5.01% |
Federal consolidation loans first disbursed on or after July 1, 1994 from applications received by the lender before November 13, 1997.
Formula: Weighted-average rate of interest rates charged on the loans being consolidated, rounded up to the nearest whole percent. A different rate may apply to any HEAL loans included in the consolidation loan.*** |
Fixed rate varies from borrower to borrower. |
|
Federal consolidation loans first disbursed before July 1, 1994.
Formula: Weighted-average rate of the interest rates charged on the loans being consolidated rounded up to the nearest whole percent or 9%, whichever is greater. A different rate may apply to any HEAL loans included in the consolidation loan.*** |
Fixed rate varies from borrower to borrower. |
Interest rates for variable-rate Federal Stafford loans and newer Federal PLUS loans are based on the bond-equivalent rate for 91-day Treasury bills established at the final auction held before June 1. The bond-equivalent rate established for 91-day T-bills at the May 31, 2005 auction was 3.00%. The bond-equivalent rate established for 91-day T-bills at the May 30, 2006 auction was 4.84%.
*Since July 1, 2001, the annual interest rate adjustments for older Federal PLUS loans and Federal SLS loans have been based on the weekly average of the one-year constant maturity Treasury yield, as reported by the Federal Reserve in its last weekly interest rate report for June. The average constant maturity yield used to determine PLUS and SLS interest rates for 2005–2006 was 3.40%. The average constant maturity yield used to determine PLUS and SLS interest rates for 2006–2007 was 5.24%.
The bond-equivalent rate (also known as the coupon-equivalent rate) for Treasury bills is somewhat higher than the discount rate typically reported by the financial media.
***These consolidation rate formulas apply to all loans included in a Federal Consolidation loan, with the exception of Health Education Assistance Loans (HEALs), which are subject to a different interest rate formula. The HEAL rate, which is adjusted annually each July 1, is based on the average bond-equivalent rate for 91-day Treasury bills auctioned during the three months ending June 30, plus 3.00%. The HEAL rate is not subject to an interest-rate cap. The HEAL rate for consolidation loans during the 12-month period that began July 1, 2005 is 7.83%.
Sources: U.S. Department of Education, Federal Reserve Board, U.S. Treasury, Bureau of the Public Debt.