Student Loan Interest Rates

While the bad news is that student loans have increased significantly in the last ten years, the interest rate has lowered and stayed low.

Find out your student loan interest rate
Each July, the new interest rate for student loans is established. In 2002, 2003 and 2004, the rate hit record lows every year. In 2005, the rates went up slightly, but they are still relatively low, as are all interest rates.

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The student loan interest rate is set every July, by Congress. The figure applies to all federal student loans. The percentage rate is based on the sale price of the 91 day Treasury Bill at auction in May. If you submit an application for a student loan before July 1st, the interest rates from the previous year will apply to your loan.

Interest rates for the year 2005- 2006
Loan type
Federal Stafford Loan
Subsidized and Unsubsidized)

Effective interest rate
4.7% to 5.3%

Parent Loan for Undergraduate Students (PLUS) 6.1%

Consolidation Loan weighted average of all loans or 8.25% whichever is lower

Student Loan Consolidation Interest Rates
Students who are concerned about the interest rate at the time that they borrow may have less to worry about than they realize. You can consolidate your loans after you graduate (as we advise throughout this guide) and agree to an interest rate at that time.

If you apply for student loan consolidation, you will still be locked in at the same rate as the rate you received when your loan was approved, regardless of annual changes to the interest rate. As of 2005, the Bush government and Congress were considering a Bill to make the interest rate variable for student loan consolidations.

Parents and guardians who borrow money to fund their child's education do have reason to be wary of the interest rate.

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