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Notice

Annual Notice of Interest Rates for Fixed-Rate Federal Student Loans Made Under the William D. Ford Federal Direct Loan Program

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Start Preamble

AGENCY:

Federal Student Aid, Department of Education.

ACTION:

Notice.

SUMMARY:

The Chief Operating Officer for Federal Student Aid announces the interest rates for Federal Direct Stafford/Ford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans), and Federal Direct PLUS Loans (Direct PLUS Loans) made under the William D. Ford Federal Direct Loan (Direct Loan) Program with first disbursement dates on or after July 1, 2019, and before July 1, 2020. Catalog of Federal Domestic Assistance (CFDA) Number: 84.268.

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FOR FURTHER INFORMATION CONTACT:

Jon Utz, U.S. Department of Education, 830 First Street NE, 11th Floor, Washington, DC 20202. Telephone: (202) 377-4040 or by email: Jon.Utz@ed.gov.

If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans (collectively referred to as “Direct Loans”) may have either fixed or variable interest rates, depending on when the loan was first disbursed or, in the case of a Direct Consolidation Loan, when the application for the loan was received. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2006, and Direct Consolidation Loans for which the application was received on or after February 1, 1999, have fixed interest rates that apply for the life of the loan. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed before July 1, 2006, and Direct Consolidation Loans for which the application was received before February 1, 1999, have variable interest rates that are determined annually and are in effect during the period from July 1 of one year through June 30 of the following year.

This notice announces the fixed interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans with first disbursement dates on or after July 1, 2019, and before July 1, 2020, and provides interest rate information for other fixed-rate Direct Loans. Interest rate information for variable-rate Direct Loans is announced in a separate Federal Register notice.

Fixed-Rate Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After July 1, 2013

Section 455(b) of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1087e(b)) includes formulas for determining the interest rates for all Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2013. The interest rate for these loans is a fixed rate that is determined annually for all loans first disbursed during any 12-month period beginning on July 1 and ending on June 30. The rate is equal to the high yield of the 10-year Treasury notes auctioned at the final auction held before June 1 of that 12-month period, plus a statutory add-on percentage that varies depending on the loan type and, for Direct Unsubsidized Loans, whether the loan was made to an undergraduate or graduate student. The calculated interest rate may not exceed a maximum rate specified in the HEA. If the interest rate formula results in a rate that exceeds the statutory maximum rate, the rate is the statutory maximum rate. Loans first disbursed during different 12-month periods that begin on July 1 and end on June 30 may have different interest rates, but the rate determined for any loan is a fixed interest rate for the life of the loan.

On May 8, 2019, the United States Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 2.479 percent.

Chart 1 shows the fixed interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2019, and before July 1, 2020.Start Printed Page 2418

Chart 1—Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After 07/01/2019 and Before 07/01/2020

Loan typeBorrower type10-Year treasury note high yield 05/08/2019 (%)Add-on (%)Maximum rate (%)Fixed interest rate (%)
Direct Subsidized Loans, Direct Unsubsidized LoansUndergraduate students2.4792.058.254.53
Direct Unsubsidized Loans 1Graduate and professional students2.4793.609.506.08
Direct PLUS LoansParents of dependent undergraduate students, Graduate and professional students2.4794.6010.507.08
1 Graduate and professional students are not eligible to receive Direct Subsidized Loans.

For reference, Chart 2 compares the fixed interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed during the period July 1, 2019, through June 30, 2020, with the fixed interest rates for loans first disbursed during each previous 12-month period from July 1, 2013, through June 30, 2019.

Chart 2—Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After 07/01/2013 and Before 07/01/2020

First disbursed  Fixed interest rates (%)Federal Register notice
On/afterBeforeDirect Subsidized Loans, Direct Unsubsidized Loans, (undergraduate students)Direct Unsubsidized Loans (graduate or professional students)Direct PLUS Loans
07/01/201907/01/20204.536.087.08N/A.
07/01/201807/01/20195.056.607.6083 FR 53864 (October 25, 2018).
07/01/201707/01/20184.456.007.0082 FR 29062 (June 27, 2017).
07/01/201607/01/20173.765.316.3181 FR 38159 (June 13, 2016).
07/01/201507/01/20164.295.846.8480 FR 42488 (July 17, 2015).
07/01/201407/01/20154.666.217.2179 FR 37301 (July 1, 2014).
07/01/201307/01/20143.865.416.4178 FR 59011 (September 25, 2013).

Fixed-Rate Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After July 1, 2006, and Before July 2, 2013

Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2006, and before July 1, 2013, have fixed interest rates that are specified in section 455(b) of the HEA (20 U.S.C. 1087e(b)). Chart 3 shows the interest rates for these loans.

Chart 3—Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans First Disbursed on or After 07/01/2006 and Before 07/01/2013

Loan typeBorrower typeFirst disbursed on/afterFirst disbursed beforeInterest rate (%)
SubsidizedUndergraduate students07/01/201107/01/20133.40
SubsidizedUndergraduate students07/01/201007/01/20114.50
SubsidizedUndergraduate students07/01/200907/01/20105.60
SubsidizedUndergraduate students07/01/200807/01/20096.00
SubsidizedUndergraduate students07/01/200607/01/20086.80
SubsidizedGraduate or professional students07/01/20062 07/01/20126.80
UnsubsidizedUndergraduate and graduate or professional07/01/200607/01/20136.80
PLUSGraduate or professional students and parents of dependent undergraduate students07/01/200607/01/20137.90
2 Effective for loan periods beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans.
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Fixed-Rate Direct Consolidation Loans

Section 455(b) of the HEA specifies that all Direct Consolidation Loans for which the application was received on or after February 1, 1999, have a fixed interest rate that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent. For Direct Consolidation Loans for which the application was received on or after February 1, 1999, and before July 1, 2013, the interest rate may not exceed 8.25 percent. However, under 455(b) of the HEA the 8.25 percent interest rate cap does not apply to Direct Consolidation Loans made based on applications received on or after July 1, 2013. Chart 4 shows the interest rates for fixed-rate Direct Consolidation Loans.

Chart 4—Direct Consolidation Loans Made Based on Applications Received on or After 02/01/1999

Application receivedInterest rate (%)Maximum interest rate (%)
On/after 07/01/2013Weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percentNone
On/after 02/01/1999 and before 07/01/2013(same as above)8.25

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Start Authority

Program Authority: 20 U.S.C. 1087, et seq.

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Dated: January 9, 2020.

Mark A. Brown,

Chief Operating Officer, Federal Student Aid.

End Signature End Supplemental Information

[FR Doc. 2020-00569 Filed 1-14-20; 8:45 am]

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