Loan interest rates

If you are offered several types of loans, it is important to compare rates and choose the loans with the best interest rates. Since interest rates may change from year to year, you should check each year to see which loans are most advantageous for you. You should always choose a loan with a lower rate over one with a higher rate.

Perkins Loan

• 5% Subsidized, fixed rate

Stafford (Federal Direct) Loan

• Subsidized
  • 2012-2013: 3.4% for undergrads, fixed rate (interest begins accumulating immediately after graduation or leaving school)

 

The subsidized Stafford Loan is no longer available for graduate students

 

• Unsubsidized
  • 6.8%, fixed rate, undergraduate and graduate

Grad Plus Loan (Federal Direct)

• 7.9% Unsubsidized, fixed rate

Parent Plus Loan (Federal Direct)

• 7.9% Unsubsidized, fixed rate

 

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Fixed or variable rate

• Fixed rate means the interest rate remains the same for the life of the loan.
• Variable rate means the interest rate can change over time, usually once per year.

Subsidized or unsubsidized loan

A subsidized loan is better because:

• Subsidized Perkins Loans do not accrue interest for nine months after you leave school.
• Subsidized Stafford loans do not accrue interest while you are in school at least half-time. Interest begins to accrue immediately upon leaving school.
• Unsubsidized loans accrue interest from the time of disbursement, which means that interest is added to the principal of your loan and then you owe interest on the original loan amount plus the accrued interest. You're paying interest on interest, which significantly increases what you will repay.