Federal Interest Rates Drop and Expanded Options for Parent Loans

Published on Author Kelsey Radcliffe

Last week in student loan news: federal student loan interest rates fell to ten year lows and more employers offer student loan repayment for Parent PLUS loans borrowers.

Federal student loan interest rates fall to ten year lows

Federal student loan interest rates for the 2016-2017 academic year have dropped from 4.29% to 3.76% for undergraduate Stafford loans (both unsubsidized and subsidized). This is the lowest that unsubsidized undergrad loans have been in the last 10 years. Graduate and Parent PLUS loan rates have also fallen slightly over half a percentage point, with unsubsidized graduate loans dropping from 5.84% to 5.31% and Parent PLUS loans decreasing to 6.31% from 6.84%. Since 2013, rates on federal student loans are determined by the yield of the 10-year U.S. Treasury bonds – before that, rates were sent by Congress. This is good news for those preparing to begin their undergraduate or graduate education and plan on financing their schooling through federal loans.  However, for borrowers with existing federal loans, those rates can only be lowered through refinancing.


“Cheaper debt clearly aids repayment for students who don’t enroll in any of the income-driven repayment options,” said Carlo Salerno, an education economist and private consultant. “It makes monthly payments lower in relative terms, but it also makes the total cost of the loan — principal plus all interest paid– less too.”

Read the full story here.

Employers now starting student loan repayment for parent plus borrowers

We’ve heard about student loan repayment as a new job perk for recent grads, but some employers will soon be offering Parent PLUS loan repayment as a new benefit. Tuition.io helps employers manage their student loan repayment programs. The company just launched a new platform that employers can use to help pay off their workers’ Parent PLUS loans, and the company is in talks with a number of employers who are interested in the benefit. Extending student debt repayment to parents will allow companies to include more employees in this perk, which firms believe will be a successful retention tool for their more experienced employees.


“As parents, many of whom are baby boomers, are thinking about retirement they have to carry this extra burden,” McQueen said. “We put ourselves in the shoes of an employer and we said ‘these are the most skilled people at our companies, they have the most experience, they know the lay of the land and so it would make sense to include them in these programs.’”

Read the full story here.

Remember, parent PLUS loans can be refinanced to a lower rate and more favorable term with Purefy. We also offer the option to transfer your parent PLUS loans to your child who is ready to take on the responsibility of the loan. See what you can save by using our Find My Rate tool.

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