Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

(Direct Loans) Subject: Interest Rates for Direct Loans First Disbursed between July 1, 2015 and June 30, 2016

Posted Date:May 15, 2015

Author: Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid

Subject: Interest Rates for Direct Loans First Disbursed between July 1, 2015 and June 30, 2016

Interest Rates for Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans

Under section 455(b)(7) of the Higher Education Act (HEA), interest rates on Federal Direct Loans are set according to a formula that is based upon an auction of 10-year Treasury notes. Separate interest rates are established each year for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for which the first disbursement is made on or after July 1 through the following June 30.

Each rate is the sum of a uniform “index rate” plus an “add-on” that varies depending on the type of loan and whether the borrower is an undergraduate or a graduate or professional student. The index rate is determined each year as the “high yield of the 10-year Treasury note” auctioned at the final auction held prior to the June 1 preceding the July 1 of the year for which the rate will be effective. Each loan type is also subject to a maximum interest rate (or cap). The interest rate for a loan, once established, applies for the life of the loan – that is, the loan is a fixed-rate loan.

Interest Rates for Direct Consolidation Loans

For Direct Consolidation Loans the interest rate is the weighted average of the interest rates on the loans included in the consolidation, rounded up to the next higher one-eighth of one percent. There is no maximum interest rate for Direct Consolidation Loans.

Direct Loan Interest Rates for 2015-2016

On Wednesday, May 13, 2015, the Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 2.237%. The chart below displays the resultant interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2015 and before July 1, 2016.

Federal Direct Student Loans 2015-2016 Interest Rates
Effective for Loans First Disbursed on or after July 1, 2015 and
prior to July 1, 2016
Loan Type Borrower Type Index Add-On Fixed
Interest
Rate
10-Year
Treasury
Note
Direct
Subsidized
Loans
Undergraduate
Students
2.237% 2.05% 4.29%
Direct
Unsubsidized
Loans
Undergraduate
Students
2.237% 2.05% 4.29%
Direct
Unsubsidized
Loans
Graduate/Professional
Students
2.237% 3.60% 5.84%
Direct PLUS
Loans
Parents of Dependent
Undergraduate
Students and
Graduate/Professional
Students
2.237% 4.60% 6.84%

Thank you for your continued support of the Federal student assistance programs.

Last Modified: 05/14/2015