Back in February, I wrote about the possibility of lower student loan interest rates. We're getting closer to the possible rate changes for variable interest rate federal student loans (those made before July 1, 2006). Remember, those can change every July 1.
Are you getting antsy to know if the rates will change? Well, you can get a good idea right now.
Variable rate loans are based on the 91-day Treasury bill 
. Specifically, they're based on the investment rate of the last 91-day T-bill auction in May. This year that's May 27. Federal Stafford and PLUS loans with variable rates each have a margin that's added on to this base rate. They also have a maximum rate.
Here are the margins and what the rates are right now:
| Loan | Margin | Current Rate |
|---|---|---|
Federal Stafford Loans during |
91-day T-bill +1.7% |
6.62% |
Federal Stafford Loans during repayment |
91-day T-bill +2.3% |
7.22% |
Federal PLUS Loans |
91-day T-bill +3.1% |
8.02% |
If you're wondering where these rates might be headed, you can check out how the 13 week treasury bills auctions have been going.
To see what the rates have been doing, you can perform a search on the Treasury Department web site . Just set the dates you want and be sure to click the 13-week box (that's 91 days…see, I can be a little mathy!) so you see only those auction results.
And make sure you're watching the investment rate. That's the interest rate to which the margin will be added.
Thanks Barbara. For years, I've been trying to determine how rates for student loans were determined. Although I knew the 91 day T-Bill was a factor, I never understood when and how it changed. You simplified my answer perfectly and I thank you for that. Looks like i"m consolidating in July. Cheers !!!
Hey Michael, glad that post helped! :) Just let us know if there's anything else you've been wondering about!
Hey everyone -- Just wanted to let you know that the interest rates for the next year have been determined. Remember these are for variable rate federal student loans made before July 1, 2006. Here they are:
- Federal Stafford Loans during in-school, grace, and deferment periods: 3.61%
- Federal Stafford Loans during repayment or forbearance: 4.21%
- Federal PLUS Loans: 5.01%
These rates will take effect on July 1 of this year.
The new rates are for variable rate federal loans made before 7/06, but what about new loans for students just entering college? Will those rates be lower after July 1 as well? My daughter is graduating high school and this is all new and confusing for us. Thanks for any help!