Electronic Announcement ID DL-22-04 Subject Interest Rates for Direct Loans First Disbursed Between July 1, 2022 and June 30, 2023 Direct Subsidized Loans,
Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2013 have fixed interest rates that are determined in accordance with formulas specified in sections 455(b)(8)(A) through (C) of the Higher Education Act of 1965, as amended (HEA). The interest rate is determined annually for all loans first disbursed during any 12-month period beginning on July 1 and ending on June 30, and 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. Loans first disbursed during different 12-month periods may have different interest rates, but the rate determined for any loan is a fixed interest rate for the life of the loan. For each loan type, the calculated interest rate may not exceed a maximum rate
specified in the HEA. The maximum interest rates are 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans made to undergraduate students, 9.50% for Direct Unsubsidized Loans made to graduate and professional students, and 10.50% for Direct PLUS Loans made to parents of dependent undergraduate students or to graduate or professional students. On May 11, 2022, the Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 2.943%. The chart
below shows the interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2022 and before July 1, 2023. Interest Rates for Direct Subsidized Loans,
Loan Type 10-Year Add-On Fixed Interest Direct 2.943% 2.05% 4.99% Direct 2.943% 3.60% 6.54% Direct PLUS 2.943% 4.60% 7.54%
Direct Unsubsidized Loans, and Direct PLUS Loans
First disbursed on or after July 1, 2022 and before July 1, 2023
Treasury Note
High Yield
Rate
Subsidized
Loans and Direct
Unsubsidized
Loans for
Undergraduate
Students
Unsubsidized
Loans for
Graduate and
Professional
Students
Loans for
Parents of
Dependent
Undergraduate
Students and for
Graduate or
Professional
Students
Thank you for your continued support of the Federal student assistance programs.
Last Modified: 06/27/2022
After you graduate, leave school, or drop below half-time enrollment, you will begin a one-time six month grace period before repayment begins. Interest does not accrue on Direct Subsidized Loans disbursed after July 1, 2014 during the grace period. Your federal loan servicer will notify you of the date your loan repayment begins and will provide further details about making payments. If you have a Direct Unsubsidized Loan, you have the option to pay interest while you are in school, or you can wait until you are no longer enrolled. Our office recommends that you pay the interest to minimize your loan debt. If you do not pay the interest, it will capitalize and be added to your total repayment amount. The example below illustrates the benefits of paying the interest while you are in school. With Interest Capitalization Without Interest Capitalization Original Loan Balance $10,000 $10,000 Capitalized Interest $4,800 $0.00 * Current Loan Balance $14,800 $10,000 Interest Rate 6.8 percent Maximum Term 120 months Fixed Repayment Amount for 119 months $170.32 $115 Fixed Repayment Amount for 1 month $169.09 $114.24 Total Repayment Interest $5,637.17 $3,808.76* Total Repayment Amount $20,437.17 $13,808.76 * Making loan interest payments benefits borrowers in the long run. For example, in this comparison, the monthly installment is $55.24 less and the total repayment at the end of the life of the loan is a savings of $1,828.41 in interest. Review your NSLDS record by logging into studentaid.gov. You can review information about: When you have submitted your graduation date in LionPATH, or cease to be enrolled at Penn State, you will be selected for Federal Loan Exit Counseling. No holds will appear on your record, but you will be sent a series of three email reminders to complete the counseling at
studentaid.gov. Exit Counseling provides important information to prepare you to repay your federal student loan(s). If you have received a Direct Subsidized, Unsubsidized or PLUS loan under the Direct Loan Program or the FFEL Program, you must complete exit counseling each time you: You will be able to choose a repayment plan that meets your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Typical loan repayment terms are 10 to 25 years. Review the Student Loan Repayment on the Federal Student Aid site. The
Student Loans online repay tool will guide you to your best repayment option.Grace Period
Repayment
Comparison Table
(interest not paid while in school)
(interest paid while in school)
6.8 percent
120 months
National Student Loan Database System (NSLDS)
Exit Counseling
Repayment Plans