The interest rate for the 2018/19 year on federal unsubsidized Direct Stafford loans is 5.05% for undergraduate students and 6.6% for graduate students. The rate is set each year by Congress, so loans taken in the past, or in future years may have a different rate. The interest rate is fixed for the life of the...
The interest rate for the 2018/19 year on federal unsubsidized Direct Stafford loans is 5.05% for undergraduate students and 6.6% for graduate students. The rate is set each year by Congress, so loans taken in the past, or in future years may have a different rate. The interest rate is fixed for the life of the loan.
There are several loan forgiveness programs, but none of them automatically forgive your loan at 10 years. With the Public Service loan forgiveness program, if you work full time at a public service job and make 120 on time payments (i.e. 10 years) in an income driven repayment plan, then the remaining balance on the loan may be forgiven. However, there are a lot of picky requirements and many students who signed up for this program are finding that they were disqualified because they missed dotting an i or crossing a t somewhere along the line. If you do get disqualified, you end up paying much more interest, so it often costs more, not less to participate. Also, the Trump Administration has earmarked this program for discontinuation , so I wouldn't count on it being around much longer. There are other loan forgiveness programs---forgiveness for service as a teacher in a high needs area, for service in the military or with certain service organizations such as AmeriCorps--but none of them forgive your entire loan after 10 years. In most cases, there is a limit to how much can be forgiven, based on the amount of your service. There is also a loan forgiveness feature attached to certain payment plans---if you have made regular payments under an income driven repayment plan, if there is a balance left after a certain period of time ( 20 - 25 years), then that balance is forgiven. However, not many people have much forgiven because the payments are calculated so you are paid up at that point. It also costs you a lot more because you're paying interest over a much longer period of time. And, if anything actually is forgiven, that amount is taxable, so you get whacked with a huge tax bill in the year that the balance is forgiven. If your income is still low enough to qualify for an income driven repayment at that time, that tax bill can be a big problem, So.....there's really no free lunch. If you borrow, you'll have to repay, one way or the other. You can find full information about federal student loans at https://studentaid.ed.gov.