New student loan interest rates for 2014-15
Before borrowing money to pay for college, it’s important to know what your loan’s interest rate will be to figure out how much you’ll pay over the life of the loan.
Effective today, July 1, 2014, all new Federal Direct Student Loans disbursed on or after July 1, 2014 through June 30, 2015, will have the following respective fixed interest rates:
- Direct Subsidized Loans (Undergraduate students) – 4.66%
- Direct Unsubsidized Loans (Undergraduate students) – 4.66%
- Direct Unsubsidized Loans (Graduate/Professional students) – 6.21%
- Direct Parent Loan for Undergraduate Students (PLUS) – 7.21%
- Direct Grad PLUS Loans (Graduate/Professional students) – 7.21%
All of these federal student loan interest rates for Direct Subsidized, Unsubsidized, PLUS and Grad PLUS loans are fixed for the life of the loan.
Student loan interest rates increase for 2014
The good news is that these rates are lower than they were when Congress allowed interest rates on new federal undergraduate student loans to double to 6.8% last July 1.
The bad news is that they’re slightly higher than after Congress finally came to a deal and lowered rates to just 3.85%.
Graduate students and parents saw increases this year as well. For 2013-14, graduate students could borrow Grad PLUS loans at 5.4%, and parents could take out PLUS loans at 6.4% to pay for their children’s education.
Federal loans still an affordable option
Even though these rates are higher than last year, federal student loans remain the best loan option when borrowing money for college.
Only after you’ve maxed out your federal loans and financial aid should you consider taking out a private student loan, as these tend to have higher interest rates and less flexible repayment terms than federal loans.
Paying for college without loans
But remember, loans are just one way to pay for college.
It’s important to be frugal when borrowing, as student debt can have serious long-term consequences on a person’s financial and personal well-being.
If you need advice on paying for college without going deep into debt, give Rick and Andy call at 1-888-234-3907 or contact us using this form.
affording college, financial aid, financial aid counseling, interest rates, student loans