Friday, August 02, 2013 New Law Averts Doubling of Federal Student Loan Rates Instead of jumping to 6.8%, federal undergraduate student loan interest rates rise this year from 3.4% to 3.9%, as a result of the Bipartisan Student Loan Certainty Act. Graduate rates drop from 6.8% to 5.4% and Parent PLUS rates to 6.4%. For all 3 programs, the interest rate is fixed for the life of the loan. After a month of negotiations, US House of Representatives passed the bill on July 31, and the President Obama now is expected to sign it. (The Senate passed the bill earlier in July.) This legislation lowers interest rates for undergraduate and graduate Stafford loans and for Parent PLUS loans beginning July 1, 2013. Interest rates will be calculated using a formula based on the 10-year Treasury note. Students lock in the rate in effect at the time they take out a loan, but future rates could vary based on the market. With this in mind, this legislation also puts a cap on interest rates in the future: 8.25% for undergraduates, 9.5% for graduates, and 10.5% for PLUS loans.