NASFAA to Students: New School Year, New Student Loan Interest Rates

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Financial Aid Administrators Are Available to Ensure Students and Parents Are Making Smart Borrowing Decisions

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As students head back to campus for the start of the 2013-14 school year, the National Association of Student Financial Aid Administrators (NASFAA) advises them to consider their new and accumulated loan debt, and make sure they are only borrowing what is absolutely needed.

It’s also a good time to take a look at their student loan interest rates and make sure they are getting the very best rate possible. On August 9, President Obama signed into law a bill that would tie student loan interest rates to market rates. Consequently, the 2013-14 interest rates for all Direct Loans with a first disbursement on or after July 1, 2013 are fixed as follows:

-- 3.86% for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students;

-- 5.41% for Direct Unsubsidized Loans for graduate/professional students; and

-- 6.41% for parent and graduate PLUS Loans.

The interest rates are now calculated using a base 10-year Treasury Note Index of 1.81% plus an add-on amount for each loan program. Under the new interest rate structure, 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 consumers 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.)

“The upshot of this most recent change is that some students who may have been considering lower-interest private or alternative loans might now save money if they opt for Federal Direct or PLUS Loans,” said NASFAA President Justin Draeger. “Student loans cannot be easily discharged in bankruptcy and students and parents should carefully consider the amount and types of financing they use to pay for college. We strongly advise students to bring their loan related questions to the trained counselors working in their institution’s Financial Aid Office.”

Navigating the way to the best student loan can be a confusing process even when Congress isn’t making major programs changes after students have already begun reviewing their financial aid packages. On-campus financial aid professionals are best positioned to help students and families sort through the recent changes and ensure they have secured the financing that will best meet their needs.

NAFSAA offers several resources to better inform the media, policymakers and other interested parties about the facts surrounding student aid funding, debt and related issues:

-- For detailed information on the federal financial aid programs, this summer NASFAA recently released an updated edition of its annual federal student aid primer, the National Student Aid Profile.

-- In February, NASFAA’s Task Force on Student Indebtedness released eight recommendations aimed at improving the system for students and institutions throughout all stages of borrowing, including pre-borrowing, in-school, and repayment.

-- NASFAA has supported changes to the loan programs that were recently signed into law and issued a statement on the Bipartisan Student Loan Certainty Act, which has now passed into law.

NASFAA has experts available to speak to reporters as they write about these and other student financial aid issues. Please contact us at news(at)nasfaa(dot)org for additional information or to schedule an interview.


The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at more than 3,000 colleges, universities, and career schools across the country. Each year, our members help nearly 15 million students receive funding for postsecondary education. In all, NASFAA member institutions served 97 percent of all federal student aid recipients in the US. Based in Washington, DC, NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit

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