Answers to Your Questions on Student Loan Interest
A college degree is a vital part of helping students have a successful future and a place in the middle class, and making college affordable is a major priority for the Obama Administration.
As of July 1, 2013, the interest rate on new Stafford Loans rose to 6.8% from the previous rate of 3.4%. Our Administration is actively working with Congress to prevent student loan rates from doubling. In addition, the Administration has advocated that any plan passed by Congress apply to all loans first disbursed after June 30, even loans already disbursed.If the law is changed, the Department and its servicers will adjust rates for all affected borrowers, including those who had already received their first subsidized loan disbursement, without any further action on the part of the borrower or the school..
We know some borrowers and families may have some questions about what the rate change means and we’ve answered some of the most common questions below. If you do have specific questions about your loan please visit http://studentaid.ed.gov/ or contact 1-800-4-FED-AID for more information.
Q: Should I still apply for federal student aid given the interest rate hike?
A: Students and families who wish to obtain financial aid should complete should complete a 2013-2014 FAFSA if they have not if they have not already done so. Schools should continue to award and process Direct Subsidized Loans with estimated disbursement dates. The Administration is working with Congress to bring rates back down for new loans.
Q: What is the current rate of federal subsidized loan?
A: Absent further Congressional action, the interest rate for all Direct Subsidized Loans with a first disbursement date on or after July 1, 2013, is 6.8%. This is the same interest rate that applies to Direct Unsubsidized Loans.
Q: Is the 6.8% rate permanent for the lifetime of my loan?
A: The Obama Administration continues to work with Congress to reach agreement on a plan to reverse the doubling of those interest rates. Further, the Administration has urged that any plan passed by Congress apply to all loans first disbursed after June 30, even loans already disbursed. If the law is changed, the Department and its servicers will adjust rates for all affected borrowers, including those who had already received their first subsidized loan disbursement, without any further action on the part of the borrower or the school.
What if I already have a loan? Does the interest rate change?
A: No change in interest rates on a loan where the first disbursement was before July 1, 2013