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Loan interest rates

If you are offered several types of loans, it is important to compare rates and choose the loans with the best interest rates. Since interest rates may change from year to year, you should check each year to see which loans are most advantageous for you. You should always choose a loan with a lower rate over one with a higher rate.

Perkins Loan

  • 5% Subsidized, fixed rate

Stafford (Federal Direct) Loan

  • Subsidized
    • 2008-2009: 6% for undergrads, 6.8% for graduate students, fixed rate
    • 2009-2010: 5.6% for undergrads, 6.8% for graduate students, fixed rate
  • Unsubsidized
    • 6.8%, 2008-2009 and 2009-2010, fixed rate

Grad Plus Loan (Federal Direct)

    • 7.9% Unsubsidized, 2008-2009 and 2009-2010, fixed rate

Parent Plus Loan (Federal Direct)

  • 7.9% Unsubsidized, 2008-2009 and 2009-2010, fixed rate

Fixed or variable rate

  • Fixed rate means the interest rate remains the same for the life of the loan.
  • Variable rate means the interest rate can change over time, usually once per year.

Subsidized or unsubsidized loan

A subsidized loan is better because:

  • Subsidized Stafford loans do not accrue interest until six months after you graduate or drop below half-time. Subsidized Perkins Loans have a nine month grace period after you leave school.
  • Unsubsidized loans accrue interest from the time of disbursement, which means that interest is added to the principal of your loan and then you owe interest on the original loan amount plus the accrued interest. You're paying interest on interest, which significantly increases what you will repay.
 

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