All Parent college loans are now Direct PLUS loans. They can only be obtained directly through the U.S. Department of Education. Rates for these loans are now fixed at 7.9%.
If you are wondering how these rates compare to past ones, check out this graph:
Student Loan Interest Rates
* 2008-9 Stafford rates are for fixed, subsidized loans * 2006-9 Plus rates are for fixed FFELP loans
Although PLUS rates have historically been higher than Stafford rates, you can see that the gap has grown larger with the passage of the latest college loan legislation.
You can check to see what rate your loans would qualify for using the student loan consolidation calculator. Many graduates will qualify for a lower interest rate when they consolidate.
Federal interest rates for college loans have always been something of a political football. However, for the foreseeable future there won't be any drastic difference in the rates. SAFRA, the major higher education legislation passed in this year's health bill, did not include interest rate changes.
But lowering federal interest rates may make life after college more affordable, but it does not guarantee that students can afford the cost of tuition at the schools they want to attend.
Right now, these tuition gaps force many students to take out private student loans. When students realize they need thousands more than they will receive from the federal government, they do not always take the time to shop around for the best private rates. To make sense, any decrease in federal rates should be accompanied by raising annual and lifetime limits.
Bottom line: For a student, federal interest rates on subsidized loans are a good deal. For a parent, the deal is not as good, but if you do not have sterling credit or collateral to use, a plus loan is an easy option.