William D. Ford Federal Direct Loan (Direct Loan) Program Interest Rate

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William D. Ford Federal Direct Loan Program, which is also known as FDLP, FDSLP, and Direct Loan Program, is the kind of program that provides low interest loans for every student or every parent of the student to help them pay the cost of the education after graduating from high school. Instead of the bank or the other financial institution, the one who lends the loan is the Department of Education of the United States.

As William D. Ford Federal Direct Loan Program emphasizes the low interest, it is important for you to understand the interest about this program. If you have zero knowledge about it, do not worry as you will be guided here.

In general, the term interest is used to call money that is paid to the lender in exchange for borrowing money. According to Federal Student ID, the amount of interest that accumulates on your loan between your monthly payments is determined by a daily interest formula. For your information, this formula is the one that consists of multiplying your outstanding principal balance by the interest rate factor (the one that is used to calculate the amount of interest that accumulates on your loan. This one is determined by dividing the interest rate of your loan by the number of days in the year) and multiplying that result by the number of days since the last time you made the last payment. Here is the simple daily interest formula that everyone has to know:

Interest amount = outstanding principal balance x interest rate factor x number of days since the last payment

Once again, the interest rate is calculated as a percentage of the unpaid principal amount or loan amount borrowed. Apparently, the interest rate varies and everything depends on the loan type. Before going further, it is better for you to know about the kinds of direct loans, as follows:

  • Direct PLUS Loan
  • Direct Subsidized
  • Direct Unsubsidized
  • Direct Consolidation

Aside from the kinds of loans, for most kinds of federal student loans, it depends on the first disbursement date of the loan. Below are the current interest rates:

  • Undergraduate borrowers: 3.73% (Direct Subsidized Loans and Direct Unsubsidized Loans)
  • Graduate or professional borrowers: 5.28% (Direct Unsubsidized Loans)

Dependent undergraduate:

  • Year Eligibility: First year (01 – 29 credits)
    Maximum Subsidized Loan: $3,500
    Additional Unsubsidized Loan: $2,000
    Total Loan Combined Subsidized and Unsubsidized: $5,500
  • Year Eligibility: Second year (30 – 59 credits)
    Maximum Subsidized Loan: $4,500
    Additional Unsubsidized Loan: 2,000
    Total Loan Combined Subsidized and Unsubsidized: $6,500
  • Year Eligibility: Third year and fourth year (60 credits) BA programs
    Maximum Subsidized Loan: $5,500
    Additional Unsubsidized Loan: $2,000
    Total Loan Combined Subsidized and Unsubsidized: $7,500

Independent undergraduate:

  • Year Eligibility: First year (01 – 29 credits)
    Maximum Subsidized Loan: $3,500
    Additional Unsubsidized Loan: $6,000
    Total Loan Combined Subsidized and Unsubsidized: $9,500
  • Year Eligibility: Second year (30 – 59 credits)
    Maximum Subsidized Loan: $4,500
    Additional Unsubsidized Loan: 6,500
    Total Loan Combined Subsidized and Unsubsidized: $10,500
  • Year Eligibility: Third year and fourth year (60 credits) BA programs
    Maximum Subsidized Loan: $5,500
    Additional Unsubsidized Loan: $7,000
    Total Loan Combined Subsidized and Unsubsidized: $12,500

It should be noted that most federal student loans have loan fees and these loan fees are a percentage of the total loan amount. The loan fee is cut from each loan disbursement that you get. If you do not get it, basically, the money that you get will be less than the amount that you actually borrow. Bear in mind that your responsibility is to repay the whole amount you borrowed and not just the amount that you received. Here are the current loan fees for Federal Direct Subsidized Loans, Federal Direct Unsubsidized Loans and Federal Direct PLUS Loans:

Loan fees for Direct Subsidized Loans and Direct Unsubsidized Loans:

First Disbursement Date Loan Fee
On or after October 1, 2020 and before October 1, 2022 1.057%
On or after October 1, 2019 and before October 1, 2020 1.059%

Loan fees for Direct PLUS Loans:

First Disbursement Date Loan Fee
On or after October 1 2020 and before October 1, 2022 4.228%
On or after October 1, 2019 and before October 1, 2020 4.236%

Apart from everything above, you might want to know about the interest rates on federal student loans first disbursed before July 1, 2021. If you do, below are the tables that provide the interest rates for Direct Loans and Federal Family Education Loan (FFEL) Program loans on or after July 1, 2006 and before July 1, 2021:

Fixed interest rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans – Undergraduate Borrowers:

First Disbursement Date Fixed Interest Rate
7/1/20-6/30/21 2.75%
7/1/19–6/30/20 4.53%
7/1/18–6/30/19 5.05%
7/1/17–6/30/18 4.45%
7/1/16–6/30/17 3.76%
7/1/15–6/30/16 4.29%
7/1/14–6/30/15 4.66%
7/1/13–6/30/14 3.86%
7/1/11–6/30/13 3.4%
7/1/10–6/30/11 4.5%
7/1/09–6/30/10 5.6%
7/1/08–6/30/09 6.0%
7/1/06–6/30/08 6.8%

Fixed interest rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans – Graduate or Professional Borrowers:

First Disbursement Date Fixed Interest Date
7/1/06–6/30/12 6.8%

Fixed interest rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans – Undergraduate Borrowers:

First Disbursement Date Fixed Interest Rate
7/1/20-6/30/21 2.75%
7/1/19–6/30/20 4.53%
7/1/18–6/30/19 5.05%
7/1/17–6/30/18 4.45%
7/1/16–6/30/17 3.76%
7/1/15–6/30/16 4.29%
7/1/14–6/30/15 4.66%
7/1/13–6/30/14 3.86%
7/1/06–6/30/13 6.8%

Fixed interest rates for Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans – Graduate or Professional Borrowers:

First Disbursement Date Fixed Interest Rate
7/1/20-6/30/21 4.30%
7/1/19–6/30/20 6.08%
7/1/18–6/30/19 6.6%
7/1/17–6/30/18 6%
7/1/16–6/30/17 5.31%
7/1/15–6/30/16 5.84%
7/1/14–6/30/15 6.21%
7/1/13–6/30/14 5.41%
7/1/06–6/30/13 6.8%

Fixed interest rates for Direct PLUS Loans – Parents and Graduate or Professional Borrowers:

First Disbursement Date Fixed Interest Rate
7/1/20-6/30/21 5.30%
7/1/19–6/30/20 7.08%
7/1/18–6/30/19 7.6%
7/1/17–6/30/18 7%
7/1/16–6/30/17 6.31%
7/1/15–6/30/16 6.84%
7/1/14–6/30/15 7.21%
7/1/13–6/30/14 6.41%
7/1/06–6/30/13 7.9%

Fixed interest rates for Federal PLUS Loans – Parents and Graduate or Professional Borrowers:

First Disbursement Date Fixed Interest Rate
7/1/06–6/30/10 8.5%

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