Current Student Loan Rates

Answer 1

Student loan rates are similar to the current personal loan rates offered by most banks. The federal government offers direct and guaranteed college education loans with rates that are not subject to change during the time the student is attending school, nor during the repayment period. Private schools and lending institutions offer loans guaranteed by the federal government and the interest rates on these loans cannot exceed the limits placed on rates for direct federal loans.

Direct Federal Student Loan Interest Rates

The popular Stafford Loan may be partly subsidized by the federal government. Currently the interest rate on a Stafford Loan is 3.4 percent for any subsidized amount for undergraduate students and 6.8 percent on unsubsidized loan amounts as well as loans for graduate students. Students taking out a direct federal loan cannot be charged interest on the portion subsidized by the government.

The Parent Direct PLUS Loan program offers low interest loans to parents of college students. The parents must apply for these loans because the eligibility is partly determined by the family income and credit standing. These loans carry a 7.9 percent interest rate. Banks or credit unions may offer these PLUS program loans as well, guaranteed against default by the federal government. However the interest rates on these loans may be over 8 percent in some cases.

Loans Made By Private Schools Or Corporations

These loans vary considerably in terms of the interest rates and students should check with the financial aid office at a participating college for the latest information. Quite often private colleges and universities make special loans, offer grants and scholarships to students with high academic achievement. These loans are usually on a financial need basis and the student must complete a FAFSA or other application to be considered.

Federal Consolidation Loan Rates

Students who have left school or earned their degree will often find that carrying several direct or guaranteed federal loans results in a very large monthly outlay in repayments. The government has a consolidation loan program in place to help students seeking a lower monthly installment payment. Combining the loans into a single agreement often saves money in terms of monthly installments but will usually result in higher total payments over the life of the loan. Currently the federal consolidation loan rates is the weighted average of the combined interest rates on all eligible loans. The final interest rate cannot exceed 8.25 percent.