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What Are Loans?

Federal Direct Loans are a form of financial aid available to assist undergraduate students attending college at least half-time. Students may use the funds to pay for tuition, books, and living expenses. Loans must be repaid at a low fixed-rate.


Interest Rates for New Direct Loans

Under the Higher Education Act of 1965, as amended, interest rates are determined each spring for new Direct Loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan has a fixed interest rate for the life of the loan.

Temporary 0% Interest as a Result of the COVID-19 National Emergency

To provide relief to student loan borrowers during the COVID-19 national emergency, interest on most federal student loans has been temporarily set at 0%. The 0% interest will last from January 2021 through September 2021.

Have questions? Find out what loans qualify, and get additional information about the 0% interest period and other student loan flexibilities due to the COVID-19 national emergency.

The following table provides the fixed interest rates for new Direct Loans first disbursed on or after for July 1, 2021 to July 1, 2022. These rates will apply to new Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans made during this time.

Loan Type Borrower Type Fixed Interest Rate
Direct Subsidized Loans and Direct Unsubsidized Loans Undergraduate 3.73%
Unsubsidized Loans Graduate/Professional 5.28%
Direct PLUS Loans Parents and Graduate/Professional Students 6.28%

Learn about interest rates and fees associated with federal student loans




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