Federal Stafford Loan Interest Rate

Federal Stafford loan interest rates are determined by the US Dept. of Education. For subsidized Stafford loans, the government pays the interest while you are in school. A portion of your loan may be unsubsidized which means the interest will accumulate while you are in school and you will have to pay it off after you graduate. You always have the option of making payments while you are in school - but most people defer interest payments.

Current Stafford Loan Interest Rates

Direct Subsidized Loans

  • Undergraduate students: The interest rate on subsidized loans first disbursed to undergraduate students between July 1, 2013 and June 30, 2014 is fixed at 3.86%.
  • Graduate students: Unfortunately, subsidized Stafford Loans are not available to graduate students for the 2013-2014 year.

Direct Unsubsidized Loans

  • Undergraduate students: The interest rate is fixed at 3.86% for undergraduate borrowers.
  • Graduate students: Graduate unsubsidized loans have a fixed interest rate of 5.41%.

If you qualify under the Servicemembers Civil Relief Act, the interest rate on loans you obtained before entering military service may be capped at 6% during your service. You must contact your loan servicer to request this benefit.

Stafford Loan Interest Rate History: 1992—2013

The Stafford Loan rates have consistently changed every year with a high of 8.25% from 1995 to 1998, and a low of 3.37% during the 2004/2005 fiscal year.

Variable interest rates were available for Stafford Loans until 2006, when fixed interest rates were introduced. The variable rate adjusts based on the strength of the economy and the prime and LIBOR rates. In order to protect the borrower from extreme financial responsibility, there is a limit to how high the variable rate can go. These rates may rise or fall during the lifespan of a loan.

During 2006-2007, the fixed-rate option was introduced to allow borrowers to avoid the potential heightening of a variable rate. Fixed rates remain the same regardless of economic factors.

In 2007, the College Cost Reduction and Access Act temporarily and gradually lowered rates over the course of 3 years to reduce the cost of education during the recession.

In 2012, Congress just barely passed an extension in time, due to trouble finding the $6 billion required to fund it. However, Congress was able to pass the bill, ensuring the 3.4% interest rate remained intact for the 2012–2013 year. Similarly, Congress passed a bill on August 9, 2013 that lowered rates for students for the 2013–2014 year.

In August of 2013, President Obama signed the Bipartisan Student Loan Certainty Act of 2013, changing how student loan interest rates are determined. This new bill links student loan rates to the Federal 10-year Treasury rate, adding a small margin. These new rates are retroactive, effective for all loans disbursed on or after July 1, 2013.

Under this new bill, Federal student loan interest rates are fixed for the life of the loan; however, the rates for new loans will change annually, based on the current market rates.

The following are the Stafford Loan rates and major legislation changes attributed with the loan since 1992:

Year Unsubsidized Fixed Rate Subsidized Fixed Rate Variable Rate (for loans disbursed prior to 2006) Legislation Affecting Stafford Loans
2013-2014 3.86% 3.86% n/a Bipartisan Student Loan Certainty Act of 2013; H.R. 1911
2012-2013 6.8% 3.4% n/a Moving Ahead for Progress in the 21st Century Act (MAP-21)
2011-2012 6.8% 3.4% n/a The College Cost Reduction and Access Act of 2007; P.L. 110-84
2010-2011 6.8% 4.5% 2.47% The College Cost Reduction and Access Act of 2007; P.L. 110-84
2009-2010 6.8% 5.6% 2.48% The College Cost Reduction and Access Act of 2007; P.L. 110-84
2008-2009 6.8% 6.0% 4.21% The College Cost Reduction and Access Act of 2007; P.L. 110-84
2007-2008 6.8% 6.8% 7.22%
2006-2007 6.8% 6.8% 7.14%
2005-2006 n/a n/a 5.3% Higher Education Act Amendments of 2002; P.L. 107-139
2004-2005 n/a n/a 3.37%
2003-2004 n/a n/a 3.42%
2002-2003 n/a n/a 4.06%
2001-2002 n/a n/a 5.99%
2000-2001 n/a n/a 8.19%
1999-2000 n/a n/a 6.92%
1998-1999 n/a n/a 7.46%

1) Transportation Equity Act for the 21st Century; P.L. 105-178

2) Higher Education Act Amendments of 1998; P.L. 105-244

1997-1998 n/a n/a 8.25%
1996-1997 n/a n/a 8.25%
1995-1996 n/a n/a 8.25%
1994-1995 n/a n/a 7.43%
1993-1994 n/a n/a 6.22%
1992-1993 n/a n/a 6.94% Higher Education Amendments of 1992; P.L. 102-325

Prior Federal Loans and Financial Aid History: If you currently have a Stafford Loan and would like to check the interest rate, servicer information, and other financial aid history, go to the National Student Loan Data System.

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Sources: NY Times, Finaid.org