Interest rates and fees

When you accept loans, you accept an original amount called a 'principal'. When you enter into repayment, you will repay more than the original principal. Items such as interest and fees may be added to the principal.

Interest is money paid to the lender in exchange for borrowing money and set into law by Congress. Interest is calculated as a percentage of the unpaid principal borrowed. Below are the current interest rates.

Direct Undergraduate Subsidized Loan
Fixed 4.66%

Direct Undergraduate Unsubsidized Loan
Fixed 4.66%

Direct Parent Loan for Undergraduate Students
Fixed 7.21%

The amount of interest that accrues on your loan is determined by a simple daily interest formula.  Multiply your loan balance by the number of days since the last payment times the interest rate factor.  The interest rate factor is calculated by dividing your loans interest rate by the number of days in the year.  For more information on how to calculate your loan interest and various other calculators, visit the FinAid.org web site.

Most student loans have loan fees that are deducted proportionately from each loan disbursement you receive.  This means the loan you receive will be less than the principle you borrow.  You will be responsible for repaying the entire principle amount you borrow.  The Department of Education will charge a 1.072% loan origination fee deducted from each loan disbursement for loans disbursed on or after December 1, 2013.  This entire fee goes to the government to help reduce the cost of the loans.

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