Since 2013, interest rates on federal student loans are tied to the financial markets, specifically the yield of the 10-year Treasury note yield at its May auction. With the yield 0.37% lower than a year ago, interest rates on federal loans have also gone down by that amount.
Direct Subsidized and Unsubsidized loans for undergraduates (formerly Stafford Loans) for the 2015-2016 school (disbursed between July 1, 2015 and June 30, 2016) will have an interest rate of 4.29%.
Direct Unsubsidized loans for graduate or professional students will have an interest rate of 5.84%.
Direct PLUS loans for parents or graduate or professional students will have an interest rate of 6.84%.
The typical undergraduate taking out an unsubsidized loan for the coming school year will therefore save about $100-$250 over the course of repaying this year’s loan, compared with last year’s.