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Breaking News: 2016/2017 Federal Student Loan Interest Rates Have Been Set

The federal government has just furnished the Class of 2016 with a valuable graduation present—the gift of low interest rates.

Per 2013 legislation, federal student loan interest rates are set for each upcoming school year based upon the 10-year U.S. Treasury Note yield as of June 1st.  The final Treasury Note auction prior to June 1st was held on Wednesday, so we now know rates for loans soon-to-be borrowed for the 2016/17 academic year.  Happily for student loan borrowers and their families, the news is good!

  • The rate for Subsidized and Unsubsidized Direct Loans for undergraduate students will be 3.76%.
  • The rate for Unsubsidized Direct Loans for graduate students will be 5.31%
  • And the rate for Direct PLUS Loans for graduate and parent borrowers will be 6.31%.

These rates represent over a half a percentage point drop from rates for the 2015/16 academic year, and signify a 10-year low for most of the loans since rates were fixed on federal student loans in 2006.

The above rates will go into effect on July 1st, and will apply to all college loans borrowed during the 2016/17 school year, by both freshman and continuing student borrowers (and their parents).  While rates are reset each July 1st for new loans, these (comparatively) low rates are locked in for the life of any federal student loans borrowed for this upcoming academic year.

In a time of rising tuition and student debt levels, we at The Insider are happy to be able to report on some good news for student loan borrowers and their families.  Happy graduation!

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Written by Shannon Vasconcelos
Shannon Vasconcelos is a college finance expert at College Coach. Before joining College Coach, she was a Senior Financial Aid Officer at Tufts University and Boston University.