Federal Subsidized Loan Interest Rate Information and Comparison

The interest rate on federal subsidized loans is fixed at 4.53% for undergraduate loans and 6.08% for graduate loans as of the 2022-2023 academic year.

These rates are significantly lower than the rates for unsubsidized loans, making subsidized loans a more attractive option for students.

The fixed interest rate on subsidized loans means that the rate will not change over the life of the loan, providing borrowers with predictable monthly payments.

Borrowers do not have to pay interest on subsidized loans while they are in school at least half-time, during the six-month grace period after graduation, or during deferment periods.

You can qualify for federal financial aid like scholarships and grants, which don't require repayment, in addition to federal student loans by submitting the FAFSA.

Grants are gift aid from federal, state, or college sources, and they are awarded to students on the basis of need. There are several types of grants, including the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Institutional Grant, Mary Ann Handley Award (Free Tuition), and Iraq and Afghanistan Service Grant.

To be eligible for federal loans, you must have a finalized FAFSA on file, meet all other Federal Aid Eligibility requirements, be matriculated in an eligible degree or certificate program, and be registered for a minimum of 6 credits.

Subsidized loans are available to those who demonstrate financial need, and the interest on these loans is paid for by the federal government while a student is enrolled at least half-time (6 credits or more) and during the authorized periods of deferment.

Here are some key differences between subsidized and unsubsidized loans:

Unsubsidized loans accrue interest while the student is in school, but students have the option to pay that interest while in school to prevent it from being capitalized.

The federal subsidized loan interest rate for the 2024-25 academic year is 6.53%. This rate applies to undergraduate students who qualify for Direct Subsidized Loans.

Interest rates on federal loans are set using a formula in the Higher Education Act of 1965, based on the high yield of the 10-year Treasury notes, plus an added percentage. This means that the interest rate for subsidized loans is tied to the overall economic conditions.

The subsidized loan interest rate can lead to significant savings on total interest costs. Undergraduate borrowers who qualify for subsidized loans receive an interest subsidy from the federal government in several instances, including while they're in school, during the 6-month grace period after graduating, and during periods of deferment.

Here's a breakdown of the subsidized loan interest rates for the past few years:

Direct Loans have different interest rates depending on the type of loan. The interest rates are set annually and apply to loans disbursed between July 1 and June 30 of the following year.

For undergraduate students, the interest rate on Direct Subsidized and Unsubsidized Loans is 6.53%. This rate is used for loans disbursed on or after July 1, 2024, and before July 1, 2025.

Graduate students have a higher interest rate on their Direct Unsubsidized Loans, which is 8.08%. This rate also applies to loans disbursed between July 1, 2024, and June 30, 2025.

Direct PLUS Loans have the highest interest rate among the three types, at 9.08%. This rate is also applicable for loans disbursed on or after July 1, 2024, and before July 1, 2025.

Here's a summary of the interest rates for Direct Loans:

The current federal student loan interest rates are set each year and apply to loans from July 1 to June 30 of the next year.

Federal student loan interest rates are determined using a formula in the Higher Education Act of 1965, which is based on the high yield of the 10-year Treasury notes, plus an added percentage.

For the 2024-25 academic year, the interest rates are as follows: 6.53% for Direct Subsidized and Unsubsidized Loans (undergraduate), 8.08% for Direct Unsubsidized Loans (graduate), and 9.08% for Direct PLUS Loans.

Direct Subsidized Loans, which are only available to undergraduate students with financial need, have an interest rate of 6.53% for the 2024-25 academic year.

Here are the current federal student loan interest rates for reference:

Subsidized loans are a type of federal loan that's available to undergraduate students who demonstrate financial need. The interest rate for subsidized loans is currently 6.53% for the 2024-25 academic year.

To be eligible for a subsidized loan, you must be enrolled at least half-time in school. If you're a subsidized loan recipient, the U.S. Department of Education will pay the interest on your loan during specific periods, including while you're in school, during the 6-month grace period after graduating or leaving school, and during periods of deferment.

Here's a breakdown of the periods when interest is paid on subsidized loans:

Perkins loans are a type of subsidized loan, which means the government pays the interest while you're in school or during certain deferment periods.

The Perkins loan has a fixed interest rate of 5.00% during all periods except while you're in school, on a grace period, or in deferment.

Here's a breakdown of the interest rates for Perkins loans:

This means you won't have to pay any interest on your Perkins loan while you're in school or during certain deferment periods, which can really help you save money.

Subsidized vs Unsubsidized Loans: What's the Difference?

Subsidized loans are only available to undergraduate students with financial need, and the interest rate is currently 6.53% for the 2024-25 academic year.

The interest rate for subsidized loans is the same for undergraduate borrowers as it is for unsubsidized loans, at 6.53% for the 2024-25 academic year.

However, subsidized loans come with an interest subsidy from the federal government, which can lead to major savings on total interest costs.

The U.S. Department of Education pays interest on subsidized loans in several instances, including while you're in school, during the 6-month grace period after graduating or leaving school, and during periods of deferment.

Unsubsidized loans, on the other hand, are available to both undergraduate and graduate students, and these loans don't have a financial need requirement.

The unsubsidized loan interest rate is different for undergraduate borrowers and graduate borrowers, with undergraduate borrowers enjoying a lower rate at 6.53% for unsubsidized loans.

Graduate borrowers have an unsubsidized loan interest rate of 8.08%, which is significantly higher than the interest rate for subsidized loans.

Here's a comparison of the interest rates for subsidized and unsubsidized loans for the 2024-25 academic year:

As you can see, subsidized loans offer a lower interest rate and an interest subsidy, making them a more attractive option for undergraduate students with financial need.

Federal student loan interest rates change every year. Each year, new federal loan interest rates are set and apply to loans from July 1 of that year to June 30 of the next.

The interest rates on federal loans are set using a formula in the Higher Education Act of 1965 (HEA). This formula is based on the high yield of the 10-year Treasury notes, plus an added percentage.

Here are the current federal student loan interest rates for loans disbursed on or after July 1, 2024, and before July 1, 2025: