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Financial Aid

Recent News on Federal Student Loans

On Friday, August 9, 2013, President Obama signed the Bipartisan Student Loan Certainty Act of 2013.  The new law will tie interest rates on the Federal Direct Student Loan and Federal Direct PLUS Loan to the 10-year Treasury note.*

What does that mean for the 2013-14 academic year?
Effective July 1, 2013, federal loans will be established based upon the 10-year Treasury note rate of 1.81% plus the additional percentage for each type of federal loan.  As a result, the permanent interest rates on any federal loans disbursed from July 1, 2013 to June 30, 2014 will be as follows:

  • Federal Direct Undergraduate Student Loan (both Subsidized and Unsubsidized): 3.86%

  • Federal Direct Graduate Student Loan: 5.41%

  • Parent & Graduate PLUS Loan: 6.41%


What happens next year?
On July 1 of each year, the rate for each type of federal loan will be established based upon the 10-year Treasury note rate and the additional percentage for each type of federal loan as indicated below:

  • 2.05% for Federal Direct Undergraduate Student Loan (both Subsidized and Unsubsidized)

  • 3.6% for Federal Direct Graduate Student Loan

  • 4.6% for Parent and Graduate PLUS Loan


That total percentage will stand as the interest rate tied to that academic year’s loan, and be set for the life of the loan. The following year, the 10-year Treasury note will have a new rate, and the total loan interest rate for that academic year’s new loans will be set once again.

Though the rates will change on new loans every year, the law does set maximum rates:

  • 8.25% for Federal Direct Undergraduate Student Loan (both Subsidized and Unsubsidized)

  • 9.5% for Federal Direct Graduate Student Loan

  • 10.5% for Parent and Graduate PLUS Loan


To learn more about federal student loans, visit StudentAid.gov, and, as always, for any other questions or information on financial aid or student loans through MEFA, contact our team at info@mefa.org or 800-449-MEFA (6332).

*The 10-year Treasury note is essentially a loan given to the U.S. government.  It is one of the U.S. Treasury bills, notes and bonds, and it's the only one that matures in a decade.  Like all other Treasuries, it is sold at an auction.  These federal loans are based upon the final auction prior to June 1 of that year.  The rate indicates the confidence investors have in economic growth.  The note is the most popular debt instrument in the world and the rate of the note is important because it is the benchmark rate that guides almost all other interest rates.





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