Posted Date:May 30, 2017
|Author:||Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid|
Subject: Interest Rates for Direct Loans First Disbursed between July 1, 2017 and June 30, 2018
Under section 455(b)(8) of the Higher Education Act of 1965, as amended (HEA), interest rates on Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans that are first disbursed on or after July 1, 2013 are set according to a formula that is based upon a U.S. Department of the Treasury auction of 10-year Treasury notes. Separate interest rates are established each year for loans for which the first disbursement is made on or after July 1 through the following June 30 of the following year.
Each rate is the sum of a uniform index plus an add-on that varies depending on the type of loan and whether the loan is for an undergraduate or a graduate or professional student. The index is 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 interest rate is a fixed-rate.
Direct Loan Interest Rates for 2017-2018
On Wednesday, May 10, 2017, the Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 2.400%. The chart below shows the interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2017 and before July 1, 2018.
| Interest Rates for |
Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans
First Disbursed on or After July 1, 2017 and Prior to July 1, 2018
|Loan Type||Borrower Type||Index||Add-On|| Fixed|
Students and Parents of
Interest Rates for Direct Consolidation Loans
The interest rate for Direct Consolidation Loans remains the weighted average of the interest rates on the loans included in the consolidation, rounded to the next higher one-eighth of one percent. There is no maximum interest rate for Direct Consolidation Loans.
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