Some Good News for College Borrowers

If you’re a parent or student who needs to borrow to help pay for college expenses, your 2016-17 Federal Direct Loans will enjoy the lowest interest rates in five years.

The Federal Direct Loan program provides nine out of every 10 college loans in the United States. Interest rates on 2016-17 Federal Direct Loans will be 0.53% lower than in 2015-16:

Federal Direct Loan Type

2016-17 2015-16
Subsidized

3.76%

4.29%

Unsubsidized

3.76%

4.29%

Graduate Student PLUS

5.31%

5.84%

Parent PLUS

6.31%

6.84%

Each year’s Federal Direct Loans interest rates are fixed, meaning they never go up or down, and the interest rates for loans made the year1 are based on the interest rate for 10-year treasury notes auctioned by the government in May.

While lower interest rates are good news, it’s still important to borrow conservatively. For example, a student who borrows the maximum allowable amount of subsidized and unsubsidized loan during his or her freshman year will save only $42 under the new interest rates versus the interest rates in place for 2015-162.

Need strategies for keeping your college debt manageable? College Affordability Solutions brings 40 years of experience in higher education and student loans to advise you. Contact (512) 366-5354 or collegeafford.gmail.com if you want to explore what College Affordability Solutions can do for you.

1    2016-17 Federal Direct Loans are loans whose proceeds are fully or partially disbursed from July 1, 2016 through June 30, 2017. 2015-16 Federal Direct Loans are loans whose proceeds are fully or partially disbursed from July 1, 2015 through June 30, 2016.

2    This assumes the student repays the loans according to the standard repayment schedule used by most students.

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