College Student Loan Update

Students and their parents have to pay back more than the principal on college loans – interest and fees are assessed on the principal loan amount, which increases the overall cost of attending college. It is important to note that Subsidized loans start to accumulate interest after a grace period following graduation, while Unsubsidized loans start accumulating interest after disbursement. According to the U.S. Department of Education, between July 1, 2017 and June 30, 2018, federal loan interest rates are:

Direct Subsidized and Unsubsidized loans – 4.45 percentGraduate Direct Unsubsidized loans – 6 percentParent Direct PLUS loans – 7 percentPerkins loans – 5 percent

These fixed rates apply for the life of the loan. Every July 1, the government updates the interest rates, but the new rates only apply to new loans taken out during the year. Federal laws impact interest rates, this is why we blogon what Congress is considering for student interest rates and loan policies.

Federal loans have fees that are based on the amount borrowed. The fees are a percentage of the loan amount that are deducted from each disbursement. As of July 1, 2017, new Subsidized and Unsubsidized Direct loans have a fee of 1.066 percent, Parent PLUS loans have a fee of 4.264 percent; there are no fees for Perkins Loans.

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