Did you know you can borrow less than your total loan offer? The interest rates for undergraduate loans disbursed from 7/1/2020 to 7/1/2021 are 2.75%. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2013 have fixed interest rates that are determined in accordance with formulas specified in sections 455(b)(8)(A) through (C) of the Higher Education Act of 1965, as amended (HEA). Beth Anne Consolazio is Communications Coordinator for College Aid Services, LLC. How life insurance works with wills and trusts. Unpaid interest accumulates over time and if you put it off too long, you may repay more than what you initially borrowed. The government actually pays this interest for a subsidized loan (more on this below) while you’re in school, but if you have an unsubsidized loan then you’ll have to pay it. For the previous year, the interest rates for undergraduate loans disbursed from 7/1/2019 to 7/1/2020 were 4.53%. The first step in applying for financial aid is filing a FAFSA form, which details your financial circumstances, including income and tax information. While you aren’t required to start making payments until six months after graduation (the grace period), you can. Furthermore, many students won’t always have a choice between the two loan types, since direct subsidized loans are only offered to students who demonstrate financial need. Sign up for the free ebook from Easy Money by Policygenius. Get the all-new ebook from Easy Money by Policygenius: 50 money moves to make in a recession. Interest rates for Direct Subsidized or Unsubsidized Loans vary depending on loan type, when the loan was first disbursed, and your degree status (undergraduate or graduate). If you have an unsubsidized loan, you might consider making a payment on the accrued interest while you’re in school. But that doesn't necessarily mean unsubsidized loans aren’t helpful. The graduate loan program becomes entirely unsubsidized, which means that the borrowed amount will accrue interest while the student is in school. How long should my life insurance coverage last? There are no financial eligibility requirements for an unsubsidized loan, but you’ll still need to fill out the form and meet other qualifications. If you don’t pay the interest, it will capitalize— meaning it gets added to the principal loan amount, potentially causing you to repay much more — sometimes thousands of dollars more — over the course of your loan. If you are experiencing financial hardship and unable to make your payments, you can get forbearance, which allows you to postpone or reduce payments for a period of time. For additional information regarding loan fees and interest rates, please go to studentaid.gov. Wise borrowing means knowing how to figure out how much you need to borrow to cover your expenses and borrowing only that amount. It will help free up more discretionary income down the road in the years after graduation. Direct Unsubsidized Loans for Graduate and Professional Students. The following shows the interest rates for federal loans first disbursed on or after July 1, 2020 and before July 1, 2021. On May 12, 2020, the Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 0.700%. FEDERAL DIRECT UNSUBSIDIZED LOAN A low interest federally funded education loan, but not needbased. 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