Student Loan Interest

Lenders often charge interest for loaning money. Your payments go toward paying back principal, the amount you borrowed, plus interest. View current interest rates for federal student loans   this link will open in a new window .

Log in to your account and select Loan Details on the sidebar to find your current interest rate. Interest rate reductions may be available if you enroll in Auto Pay or if you are an Active Duty Military Service Member.

Interest accrues (builds) daily on the unpaid principal balance. Calculate your daily interest accrual using the following example:

The daily interest accrual is multiplied times the number of days between payments. If your next payment is due on March 25 and your last payment was made on February 25, your unpaid interest accrued for the March payment equals $130.20 ($4.65/day * 28 days).

Variable interest rates are determined by federal law.

Interest capitalization occurs any time unpaid accrued interest is added to the outstanding principal balance of the loan. Capitalized interest means more expense. It increases your loan principal, increases your monthly payment amount under most repayment plans, and causes you to pay more interest throughout the life of your loan.

After a loan is disbursed

• Unsubsidized Loans begin accruing interest as soon as the loan is disbursed.

• Subsidized Loans* disbursed before July 1, 2012 begin accruing interest when your grace period expires.

• Subsidized Loans* disbursed between July 1, 2012 and June 30, 2014** begin accruing interest when you stop attending school at least half-time.

* During a period of deferment, the government only pays toward accruing interest on subsidized loans.
** If you are a first-time borrower on or after July 1, 2013 and have exceeded 150% of the published length of your current program, you could potentially lose the subsidy on your subsidized loan while you are enrolled and during any grace or deferment periods.

Between payments

The amount of interest accrual varies with the number of days that elapse between payments.

An interest notice informs you about how much interest has accrued on your account. No action is needed when you receive an interest notice but the outstanding interest may capitalize if it is not paid. If you choose to pay the interest, your future monthly payments will be reduced and you will pay less interest throughout the life of your loan.

Payments are applied first towards any outstanding fees, then outstanding accrued interest, and the remainder to the principal balance. Payments received under the Income-Based Repayment Plan will be applied first to interest and the remainder to the principal balance.

Interest rates for Federal Student Loans are set by the government. Rates may vary depending on the type of loan and the date the loan was issued. Loans disbursed after 07/01/2006 have a fixed interest rate that is not subject to change. Loans disbursed between 07/01/1998 and 06/30/2006 have variable rates that are adjusted annually on July 1. The interest rates for Consolidation loans are determined by the interest rates of the loans that were included in the consolidation.

Borrowers participating in the Auto Pay payment option may be eligible for an interest rate reduction of 0.25%.

Active duty military servicemembers may also qualify for a reduced interest rate under the Servicemembers Civil Relief Act (SCRA). Learn more about military benefits.

Variable interest rates are tied to an index and change annually if the index changes. The rates are based on the 91-Day T-Bill and 1-Year Constant Maturity Treasury Yield.

Variable interest rates are adjusted annually effective July 1.

When variable interest rates change, we are required to ensure that the loan is paid off at the agreed upon time per the Master Promissory Note. The new monthly payment is based off the amount of principal remaining, any outstanding interest accrued, the new interest rate, and the number of months left to pay the loan off.