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Rates on education loans reach A+ levels

The U.S. Department of Education sets variable loan rates each year based on the rate for 91-day treasury bills at the last auction in May. On May 31, the rate for 91-day treasury bills was 3.0, an increase of 1.93 percent from 2004.

Because of this, interest rates on Stafford loans, the largest source of student loan funds in the country, and Parent Loan for Undergraduate Students (PLUS) loans, a popular loan program for parents, increased for the first time in 5 years.

On July 1, the interest rate on federal Stafford loans will increase from 3.37 percent to 5.30 percent and the interest rate on federal PLUS loans increases to 6.10 percent from 5.07 percent.

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These interest rates only apply to Stafford loans and PLUS loans disbursed after July 1, 1998. The rate increase will remain in effect through June 30, 2006.


-- Updated: June 9, 2005

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