Game of Loans

If you are intending on accepting the Stafford loans offered by the federal government then you definitely need to read this. Each year the federal government powers that be meet and come up with the new interest rates for the Stafford loans for all different levels.

To review there are two different kinds of Stafford loans- subsidized and unsubsidized loans. Subsidized Stafford loans interest is paid by the federal government while the student is enrolled half time or more in school so it does not accrue interest for the student to pay while they are in school. Unsubsidized loans do accrue interest while in school. There are also Direct Plus (Parent and Grad) loans whose interest rates are also controlled by the feds.

Without further ado, here are the interest rates for Stafford and Direct Plus loans for 2014-2015 academic year.

Direct Subsidized loans for undergraduate students: 4.66% 

Direct Unsubsidized loans for undergraduate students: 4.66%

Direct Unsubsidized loans for graduate/ professional students: 6.21%

Direct Plus Loans: 7.21% 

Those are the interest rates you can expect to see for loans that are disbursed between July 1st, 2014 and July 1st, 2015. There will probably be new interest rates each year for the loans so it will be good to keep track of what loans are gaining what interest while you are in school.

Aside from the interest rate, Stafford and Plus loans also have something called an “origination fee.”  This is a fee that is withheld from every loan that is paid for by the federal government and is included in the total amount you borrow from the government. First let’s review what the origination fee percentages are and then what that means for your balance.

For Direct Stafford Subsidized and Unsubsidized Stafford loans the loan fee percent is going to be at 1.073% and for Plus loans it will be 4.292%.

So what does that mean for your balance? It means that if you have the full $5,500 Subsidized Stafford loan as a junior or senior then $59.01 of that amount is going to be withheld and $5,440.99 will pay to your account balance BUT it is important to remember that you are borrowing the full $5,500 and will have to pay that amount back instead of what actually pays to your account.

So that’s the important news going around in the world of student loans these days. If you have questions please let us know! We understand that student loans can be a complicated business and we financial aid counselors are more than happy to help clear those murky waters.

Until next time!




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