Interest rates are established each year for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for which the first disbursement is on or after July 1 through June 30. The chart below displays the resultant interest rates for Federal Direct Loans by loan and borrower type for the 2014-15 and 2013-14 disbursement periods:

Loan Type Borrower Type July 1, 2014 –June 30, 2015 July 1, 2013 –June 30, 2014
Direct Subsidized Loans Undergraduate Students 4.66% 3.86%
Direct Unsubsidized Loans Undergraduate Students 4.66% 3.86%
Direct Unsubsidized Loans Graduate/Professional Students 6.21% 5.41%
Direct PLUS Loans Parents of Dependent Undergraduate Students and Graduate/Professional Students 7.21% 6.41%


Under the interest rate structure referenced above, all Direct Loans except Direct Consolidation Loans will be “variable-fixed,” meaning students would receive a new market-based rate with each new loan taken in subsequent school years, but then that rate would be fixed for the life of the loan. The new law also protects borrowers from market spikes by enforcing rate caps (8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students, 9.50% for Direct Unsubsidized Loans for graduate/professional students; and 10.50% for parent and graduate PLUS.).

Refer to the chart below for applicable interest rates for the Federal Direct Loans for the past four years:

First disbursement of loan made on or after: First disbursement of loan made before: Interest rate on the unpaid balance of Subsidized FDL Interest rate on the unpaid balance of Unsubsidized FDL Interest rate on the unpaid balance of a Parent or Graduate PLUS FDL
July 1, 2008 July 1, 2009 6.0 % 6.8 % 7.9%
July 1, 2009 July 1, 2010 5.6 % 6.8% 7.9%
July 1, 2010 July 1, 2011 4.5 % 6.8% 7.9%
July 1, 2011 July 1, 2013 3.4 % 6.8% 7.9%


In addition to interest, all Federal Direct Loans (subsidized and unsubsidized) have a 1.072% origination fee, disbursed on or after December 1, 2013.  This is deducted from the loan at the time of disbursement. For example, if you borrow $5,500 for the academic year, a total of $58.96 will be deducted from your loan amount and paid directly to the U.S. Department of Education. Thus, the annual net amount typically over the course of two academic semesters of the loan that would credit or disburse to your account is approximately $5,441.04.

Federal Direct Parent and Graduate PLUS Loans have a 4.288% origination fee, effective December 1, 2013.