Interest rates on PLUS Loans are fixed. The current interest rates for new PLUS Loans in 2018-2019 are 7.6% for parents of undergraduate students (Parent PLUS Loans) and for graduate students (Grad PLUS Loans). This rate is subject to change for 2019-2020 for loans first disbursed on or after July 1, 2019.
Interest rates on Parent PLUS and Grad PLUS Loans are the same.
| Academic Year | Direct Loans | FFELP |
|---|---|---|
| 2018-2019 | 7.6% | NA |
| 2017-2018 | 7.0% | NA |
| 2016-2017 | 6.31% | NA |
| 2015-2016 | 6.84% | NA |
| 2014-2015 | 7.21% | NA |
| 2013-2014 | 6.41% | NA |
Loan disbursement and default fees are effectively a form of up-front interest. Assuming a 10-year repayment term, a 4% fee is the equivalent of an increase in the interest rate of about seven-eighths to one percentage point. Assuming a 30-year repayment term, a 4% fee is the equivalent of an increase in the interest rate of about one-third to half a percentage point.
The relative impact of a fee is greater with a shorter repayment term or if the borrower prepays the loan, since the fee will be amortized over less time. This is why borrowers who plan to pay off a loan early may wish to avoid up-front fees, if possible.
| Year | Total Loan Fees |
|---|---|
| 2017-2018 (Oct. 1, 2017 - Sept. 30, 2018) | 4.264% |
| 2016-2017 (Oct. 1, 2016 - Sept. 30, 2017) | 4.276% |
| 2015-2016 (Oct. 1, 2015 - Sept. 30, 2016) | 4.272% |
| 2014-2015 (Oct. 1, 2014 - Sept. 30, 2015) | 4.292% |
| 2013-2014 (Dec. 1, 2013 - Sept. 30, 2014) | 4.288% |
| 2013-2014 (Oct. 1, 2013 - Sept. 30, 2014) | 4.204% |
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