Student Loan Rates Lowered, Including Retroactively to July 1, 2013

 (public domain comic from 1902's A Harvard Alphabet) 

In the middle of this past Friday afternoon, President Obama signed the Bipartisan Student Loan Certainty Act of 2013. As opposed to previous years where loan rates were continued, this bill allows the fluctuation of student loan rates in accordance with financial markets.

Many federal student loan borrowers will be relieved that these new rates will extend back through borrowing to July 1, 2013 (the last student loan bill expired June 30, so interest rates doubled on July 1). The rates were up to 6.8 percent for Stafford loans and 7.9 percent for PLUS loans.

Loan rates will depend on type of loan and borrower type. In 2013, the fixed rates begin as follows

  • Undergraduates: 3.86 percent
  • Graduate students: 5.41 percent
  • PLUS loans (graduate students and parents of students): 6.41 percent.

Over time, these rates will rise. However, Congress imposed a cap on just how high the interest rates can climb.

  • Undegraduates: 8.25 percent for undergraduates,
  • Graduate students: 9.5 percent,
  • PLUS loans: 10.5 percent.

As many have noted, the Congressional Budget Office did not project that rates will hit those caps within the next decade, although that same projection shows that the rates may very likely approach them.

Interested in reading more about federal student loans? You may want to read the US Department of Education’s Federal Student Aid Annual Report 2012. In it, you’ll find fantastic information like this: “In fulfilling its program responsibilities, FSA directly manages or oversees more than$948 billion in outstanding loans—representing over 163 million student loans to more than 38 million borrowers.”