Student Loans

Federal Student Loan Interest Rates Set to Increase for 2021-2022

June 25, 2021
by Team SESLOC


After two years of decreases, interest rates on federal student loans are set to increase almost a full percentage point for the 2021-2022 school year.1 The interest rates on federal student loans are reset each year after the May auction of the 10-year Treasury note.

The rates apply to new federal student loans issued on or after July 1, 2021, through June 30, 2022. The interest rate is fixed for the life of the loan.

Direct Loans: Undergraduate Students (Subsidized & Unsubsidized)

Old rate (2020-2021): 2.75%

New rate (2021-2022): 3.73%

Available to: Undergraduate students only. Subsidized loans are based on financial need as determined by the Free Application for Federal Student Aid (FAFSA); unsubsidized loans are available to anyone and are not based on financial need

Borrowing Limits (for dependent undergraduates)²:

  • 1st year: $5,500 (max $3,500 subsidized)
  • 2nd year: $6,500 (max $4,500 subsidized)
  • 3rd, 4th, 5th year: $7,500 (max $5,500 subsidized)
  • Max: $31,000 (max $23,000 subsidized)

Direct Loans: Graduate Students (Unsubsidized Only)

Old rate (2020-2021): 4.30%

New rate (2021-2022): 5.28%

Available to: Graduate or professional students only. All students are eligible regardless of financial need.

Borrowing Limits²: $20,500 per year; max $138,500

Direct PLUS Loans: Parents & Graduate Students (Unsubsidized Only)

Old rate (2020-2021): 5.30%

New rate (2021-2022): 6.28%

Available to: Parents of dependent undergraduate students and graduate or professional students.

Borrowing Limits²: Total cost of education, minus any other aid received by student or parent.

What’s the Difference Between Subsidized and Unsubsidized?

With subsidized loans, the federal government pays the interest that accrues while the borrower is in school, during the six-month grace period after graduation, and during any loan deferment periods. With unsubsidized loans, the borrower is responsible for paying the interest during these periods. Only undergraduate students are eligible for subsidized loans, and eligibility is based on demonstrated financial need.

1) The New York Times, May 28, 2021
2) U.S. Department of Education, 2021


SESLOC members have access to our knowledgeable CFS* Financial Advisor, located at SESLOC Federal Wealth Management »

Prepared by Broadridge Investor Communication Solutions, Copyright 2021.

SESLOC Wealth Management is provided through our relationship with CUSO Financial Services, L.P. (CFS)* an Independent Broker-Dealer and SEC Registered Advisor formed for the express purpose of serving Credit Union member’ investment and financial planning needs.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including potential loss of principal. Investment Representatives are registered through CFS. SESLOC has contracted with CFS to make non-deposit investment products and services available to credit union members. CFS and its representatives do not provide tax advice. For specific tax advice, please consult a qualified tax professional.

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