Interest Rates Decrease Slightly on Federal Student Loans

Each year, thousands of students take out federal loans to help pay for college or graduate school. The interest rates on federal student loans are fixed for the life of the loan but reset each year on July 1 for new loans. This year, there’s some good news for students and parents. Rates on new loans issued during this academic year–July 1, 2015, through June 30, 2016–are slightly lower than they were for the 2014/2015 academic year.

The federal government pays the interest on subsidized Stafford Loans while the student is in school, during the six-month grace period after graduation, and during any loan deferment periods. With unsubsidized Stafford Loans, the student pays the interest during these periods. Eligibility for subsidized Stafford Loans is based on financial need, as determined by the federal government’s financial aid application, the FAFSA. Graduate students aren’t eligible for subsidized Stafford Loans.

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