Interest Rate for Direct Loan
(https://studentaid.gov/understand-aid/types/loans/interest-rates#what-interest)
Interest is paid to a lender as a cost of borrowing money. Interest is calculated as a percentage of the unpaid principal amount. Unlike other forms of debt, such as credit cards and mortgages, Direct Loans are daily interest loans, which means that interest accrues (accumulates) daily. Depending on whether your loans are subsidized or unsubsidized, you may or may not be responsible for paying the interest that accrues during all periods.
The interest rate for a federal student loan varies depending on
• the loan type and
• the first disbursement date of the loan (for most types of federal student loans).
On May 8, 2024, the Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 4.483%.
The chart below shows the interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2024 and before July 1, 2025.
Perkins Loans (regardless of the first disbursement date) have a fixed interest rate of 5%.
Table 2 - Interest Rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After July 1, 2024, and Before July 1, 2025
Loan Type
|
10-Year
Treasury Note
High Yield |
Add-On |
Fixed Interest
Rate |
Direct
Subsidized
Loans and Direct
Unsubsidized
Loans for
Undergraduate
Students |
4.483% |
2.05% |
6.53% |
Direct
Unsubsidized
Loans for
Graduate and
Professional
Students |
4.483% |
3.60% |
8.08% |
Direct PLUS
Loans for
Parents of
Dependent
Undergraduate
Students and for
Graduate or
Professional
Students |
4.483% |
4.60% |
9.08% |
All interest rates shown in the chart above are fixed rates that will not change for the life of the loan.
Maximum Annual and Aggregate Loan Limits Chart
| Annual Limits for Sub/Unsubsidized Loans |
Dependent Undergraduates (excluding dependent students whose parents cannot get PLUS)
Note: All undergraduate annual loan amounts are subject to proration. |
|
Subsidized Loan |
Unsubsidized Loan |
Total |
| First Year |
$3,500 |
$2,000 |
$5,500 |
| Second Year |
$4,500 |
$2,000 |
$6,500 |
| Third Year and Beyond |
$5,500 |
$2,000 |
$7,500 |
| Independent Undergraduates and Dependent Students whose parents can’t get PLUS |
|
Subsidized Loan |
Unsubsidized Loan |
Total |
| First Year |
$3,500 |
$6,000 |
$9,500 |
| Second Year |
$4,500 |
$6,000 |
$10,500 |
| Third Year and Beyond |
$5,500 |
$7,000 |
$12,500 |
| Aggregate Limits for Sub/Unsubsidized Loans |
|
Subsidized |
Total (Subsidized and Unsubsidized) |
| Dependent Undergraduates (excluding those whose parents cannot borrow PLUS) |
$23,000 |
$31,000 |
| Independent Undergrads and Dependent Students whose parents can’t get PLUS |
$23,000 |
$57,500 |
| Graduate and Professional Students |
|
$138,500 |
Managing Loans
Students can learn more about managing their loans through https://studentaid.gov/h/manage-loans.