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Interest Rates Rise on Federal Student Loans for 2017/2018

After falling for two consecutive years, interest rates on federal student loans are now rising. The following table shows the interest  rates for new Direct Loans first disbursed on or after July 1, 2017, and before July 1, 2018. The rate is fixed for the life of the loan.

New Rate 2017/2018
Old Rate 2016/2017
Available to
Borrowing Limits

Direct Subsidized Loans:

Undergraduate Students
4.45%
3.76%

Undergraduate students only

Subsidized loans are based on financial need as determined by the federal aid application (FAFSA)

For dependent undergraduates:

1st year: $5,500 ($3,500 subsidized)

2nd year: $6,500 ($4,500 subsidized)

3rd, 4th, 5th year: $7,500 ($5,500 subsidized)

Max: $31,000 ($23,000 subsidized)

Direct Unsubsidized Loans:

Undergraduate Students
4.45%
3.76%
Undergraduate students only

For dependent undergraduates:

1st year: $5,500 ($3,500 subsidized)

2nd year: $6,500 ($4,500 subsidized)

3rd, 4th, 5th year: $7,500 ($5,500 subsidized)

Max: $31,000 ($23,000 subsidized)

Direct Unsubsidized Loans:

Graduate or Professional Students
6%
5.31%

Graduate or professional students only

Unsubsidized loans only

$20,500 per year (unsubsidized only)

Max $138,500
($65,500 subsidized)

Direct PLUS Loans:

Parents and Graduate or Professional Students

7%

6.31%

Parents of dependent undergraduate students and
graduate or professional students

Unsubsidized loans only
Total cost of education, minus any other aid received
by student or parent

 

Subsidized vs. Unsubsidized

What’s the difference? With subsidized loans, the federal government pays the interest that accrues while the student is in school, during the six-month grace period after graduation, and during any loan deferment periods. By contrast, with unsubsidized loans, the borrower pays the interest during these periods. Eligibility for subsidized loans is based on financial need. Only undergraduate students are eligible for subsidized loans.

If you have questions, contact the Experts at Henssler Financial:

Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.

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