Each year, thousands of students and parents rely on Federal Direct loans to assist them with paying for higher education costs. The interest rates on these loans are fixed for the life of the loan but the interest rate on newly issued loans adjusts annually based upon the yield of the last 10-year Treasury auction in May. On May 8, 2019 the 10-year Treasury note had a yield of 2.48% which is below the 2.995% rate from a year ago.

Use the table below to review 2018-2019 Direct loan interest rates:

Direct Loan Type
10-year Treasury Note Yield on 5/9/18
Direct Loan Rate Adjustment
2018-2019 Direct Loan Fixed Interest Rate
Decrease from
2018-2019 Interest Rates
Percentage Decrease from 2018-2019 Rates
Undergraduate 2.48% +2.05% 4.53% -0.52% 10.30%
Graduate 2.48% +3.60% 6.08% -0.52% 7.88%
Parent PLUS 2.48% +4.60% 7.08% -0.52% 6.84%
Graduate PLUS 2.48% +4.60% 7.08% -0.52% 6.84%

As the table demonstrates, the interest costs for undergraduate students will be 10.30% less expensive when compared to last year. Graduate students will be paying 7.88% less in interest over the life for their 2019-2020 loan when compared to the 2018-2019 school year rates.

Utilizing a reasonable amount of loans in a responsible manner can help pay for a portion of college costs. However, use them as a last resort. Having a well-thought out personalized college funding plan can help minimize or eliminate the need for using loans to pay college costs. Feel free to contact us to see if we can help you with reducing your college costs and paying as efficiently as possible.