As of July 1, 2009, the interest rate on unsubsidized Stafford Loans for undergraduate students is 6.8%. The interest rate on unsubsidized Stafford Loans for graduate students is 6.8%. The interest rate on a Parent or Graduate PLUS Loan is 8.5%.

Most loans disbursed before July 1, 2006, have a variable rate. The rates for July 1, 2009, through June 30, 2010, are:

• 2.48% while in repayment
• 1.88% while in-school or grace (grace or deferral)
• 3.28% - Parent and Graduate PLUS loans regardless of status.

Interest rates for Stafford and PLUS Loans disbursed before July 1, 2006, are established each July 1 based on the most recent 91-Day Treasury Bill auction in May, plus a margin determined by the U.S. Department of Education (USDE).

A quarterly interest letter is mailed to a borrower to advise of accrued interest. This letter tells how much interest has accrued if the borrower would like to pay accrued interest on a quarterly basis. Unpaid interest during this period will be capitalized (added to the principal).