Interest Rates Rise on Federal Student Loans for 2018-2019

Interest rates on federal student loans are set to rise for the second year in a row. This table shows the interest rates for new loans made on or after July 1, 2018, through June 30, 2019. The interest rate is fixed for the life of the loan.

New rate 2018-2019 Old rate 2017-2018 Available to Borrowing limits
Direct Stafford Loans: Subsidized*


5.045% 4.45% Undergraduate students only

Subsidized loans are based on financial need as determined by the federal aid application (FAFSA)

For dependent undergraduates:

1st year: $3,500 subsidized

2nd year:  $4,500

3rd, 4th, 5th year: $5,500

Max: $23,000 

Direct Stafford Loans: Unsubsidized*


5.045% 4.45% Undergraduate students only, all students are eligible regardless of financial need. FAFSA must be submitted. For dependent undergraduates:

1st year: $5,500 

2nd year: $6,500 

3rd, 4th, 5th year: $7,500 

Max: $31,000

Direct Stafford Loans: Unsubsidized

Graduate or Professional Students

6.595% 6% Graduate or professional students only; all students are eligible regardless of financial need.

Unsubsidized loans only.

$20,500 per year (unsubsidized only); max $138,500 ($65,500 subsidized)
Direct PLUS Loans:

Parents and Graduate or Professional Students

7.595% 7% Parents of dependent undergraduate students and graduate or professional students.

Unsubsidized loans only

The total cost of education, minus any other aid received by student or parent. 

Subsidized vs. unsubsidized

What’s the difference? With subsidized loans, the federal government pays the interest that accrues while the student is in school, during the six-month grace period after graduation, and during any loan deferment periods. With unsubsidized loans, the borrower is responsible for paying the interest during these periods. Only undergraduate students are eligible for subsidized loans, and eligibility is based on demonstrated financial need.

The subsidized and unsubsidized Federal Direct Loan program are all under the same “umbrella.” What this means is that there are not two separate maximum loan amounts, the way it might appear at first glance.

For example, for undergraduate freshmen, the maximum loan amount a student can receive from the Federal Direct Loan is $5,500. Of that amount, $3,500 may be subsidized based on financial need. So, when the government says that there is a $31,000 maximum limit to what a student may receive in the Federal Direct Loans, $23,000 of that amount may be subsidized. There are not two discreet limits – one at $23,000 and one at $31,000 for a total of $54,000. The unsubsidized limits are contained within the subsidized limits.

Before taking out any loans, consult with a loan officer and, if possible, a financial advisor with college planning experience. There are excellent loan repayment options available and the earlier you construct a plan that incorporates loan repayment, the less likely you are to get blindsided by debilitating monthly payments.

Additional resources:

Federal Direct Loan Program

Direct PLUS Loan Program

Direct Consolidation Loans

Federal Loan Repayment