On August 9, 2013, President Obama signed into law The Bipartisan Student Loan Certainty Act of 2013, which puts into effect a new interest rate calculation for federal loans disbursed on or after July 1, 2013 and going forward.
The new interest rates are based on the final auction of the 10-year Treasury Note rate prior to June 1st of a given year plus a statutory defined "add-on" percentage. The add-on percentage differs depending on the type of loan and the student's grade level. Each loan also has an interest rate ceiling or cap. The interest rate for a loan (established upon disbursement) will apply for the life of that loan, thus becoming a fixed interest rate loan.
The interest rate for loans made on or after July 1, 2013 through June 30, 2014 are based on the 10-year Treasury note rate of 1.810, as follows:
- 3.86% for Stafford loans to undergraduate students, based on the 10-year Treasury note rate plus 2.05%; interest ceiling of 8.25%.
- 5.41% for Stafford loans to graduate students, based on the 10-year Treasury note rate plus 3.6%; interest ceiling of 9.5%.
- 6.41% for Parent PLUS and Graduate PLUS loans, based on the 10-year Treasury note plus 4.6%; interest ceiling of 10.5%.
As a result of this new interest rate calculation structure, it is likely that many borrowers will have a set of fixed-rate loans, each with a different interest rate, including the 3.4%, 6.8%, and/or 7.9% interest rates for federal student loans issued prior to July 1, 2013.
The Financial Aid Office is here to assist you with creating repayment strategies that best suits your needs in light of these recent changes.
On August 2, 2011, President Obama signed into law the Budget Control Act of 2011, which included provisions that affect the Federal Direct Student Loan program. The following changes will be effective on July 1, 2012:
- Graduate and Professional Students: The in-College interest subsidy will be eliminated on Federal Direct Stafford Loans for Graduate and Professional students. This will affect loans borrowed for the next academic year but will not affect Federal Direct funds borrowed previously. The annual maximum amount (of what was previously subsidized and unsubsidized) does not change, but interest will now accrue on the entire loan disbursement. Previously, the $8500 borrowed in Federal Direct Subsidized Stafford Loan had interest paid by the government while in-College and during the 6 month grace period. It is this subsidy that has been eliminated. As is currently the policy, students have the option of paying this interest while in College or defer until repayment.
- All students: Reduction or rebate of loan fees will no longer be available for Federal Direct Stafford and Federal Direct Graduate PLUS loans. Currently, the federal government is subsidizing a portion of the fees charged on these loans. Beginning with next academic year, the fee on the Federal Direct Stafford Loan will be 2% and the Federal Direct PLUS loan will be 4%. This is an increase in fees from the current .5% and 2.5% respectively charged this current year.
The Financial Aid Office will continue to offer debt management programs as well as individual debt counseling to assist you with these changes