The good news for this year is that new Federal student loans are cheaper. The federal student loan interest rates are more than one-third of a percentage point cheaper than last year’s rates. And with any help from a hopeful economy, and student loan debt changes, perhaps those points will continue to drop for the sake of education. Some analysts believe this is a change that is going to continue to happen as it fluctuates within a healthy market.

Interest rates are currently at the yield on the 10-year Treasury note with a set added percentage applied. That small ‘add-on’ is for undergraduate debt more than graduate or parent loans. This means that college students get the cheapest deal on federal school loans.

Listed below are the latest student loan interest rates for the 2015-2016 school year. This rate change does not apply to federal Perkins loans, which carry a 5 percent interest rate, and always seem to have an uncertain future.

Federal loan

Eligible borrowers

2014-2015 interest rate

2015-2016 interest rate

Direct Subsidized




Direct Unsubsidized




Direct Unsubsidized

Graduate or Professional Students



Direct Grad PLUS

Graduate or Professional Students



Direct Parent PLUS




Here is what you should know about the effect the new rates will have on borrowers' bank accounts.

Borrowers will save money in the long run.

Yet, how much a borrower is going to save with this year's lower rates will strictly depend on the type of federal loan they borrow, the amount of debt and length they choose for repayment.

A first-year student taking on $5,500 in unsubsidized Stafford loans, which don't have interest covered in school can expect to pay about $117 less in interest over a standard 10-year repayment plan than had they would have under the previous rates A graduate student who has up to $20,500 in unsubsidized debt is going to save about $457 over the same plan. Even a parent borrowing $30,000 with a PLUS loan can expect to pay about $687 less over a 10-year repayment plan this year.

New Rate Will Not Apply to Old Loans

Borrowers who took on loans in previous years won't see these rates apply to their old debt. Those with older federal loans who want to lower their rates can consider consolidating, by combining their multiple loans into a single payment and get a new average on their interest rates. They can also look into refinancing through a private lender, which typically recalculate a new rate based on the borrower’s financial picture, among other factors. Before you embark on this student loan consolidation journey, learn the risks and rewards of private student loan refinancing.

Private loans don’t count

While private loan rates may also fluctuate with the market, those lenders typically determine their rates differently. There loan practices operate on a whole new ball field. They may factor a borrower's credit history, ability to repay and other information into the rate calculation.

Private loan borrowers may have a chance to choose a fixed-rate private loan, which keeps interest consistent during repayment, or opt for a variable rate, which moves with the market.

Because of falling interest rates, alternative education loans are now significantly cheaper than some of the federal government’s options.

Some banks and credit unions are offering fixed-rate loans as low as 5.5% take a look at all the reviews on bank lenders listed here, so you can find one which makes your unique student load needs.

As of now, the start-up student loan lending companies, state programs and foundation are all offering bargain loans with as little as 1% interest. Some even offer the perk of getting as much as 75% of the debt forgiven. But remember, even low-interest student loans have to be repaid

In Case You Are Interested In Alternative Loan Companies:




Georgia Student Access Loan

Students in Georgia with a 2.0+ GPA who have exhausted all other aid programs, including the parent PLUS loan.


Pickett & Hatcher Educational Fund

Students with a 2.0+ GPA and a cosigner.

2% while in school, 6% after graduation

Questa Foundation

Students from Northeast Indiana who have a 2.75+ GPA. Those who graduate and work in the area can get up to 75% of the loan forgiven.


Dakota Education Alternative Loan – North Dakota

Students from or attending college in North Dakota with cosigner with credit score of at least 575.


Dakota Education Alternative Loan – Regional

Students from or attending college in South Dakota, Minnesota, Montana, Wyoming or Wisconsin with cosigner with credit score of at least 575.



Students attending participating colleges. No cosigners needed. Some forgiveness possible.


RISLA Immediate Repay Loan

Students from or attending college in Rhode Island. Cosigner needed, but eligible for release after 24 on-time payments.


RISLA Deferred Repayment Loan

Students from or attending college in Rhode Island. Cosigner needed, but eligible for release after 24 on-time payments.


NOTE: Rates are accurate as of July 16, 2012, but subject to change. Interested students should check the websites for up-to-date information.