"Student Loan & Pell Grant Changes" The maximum annual Pell Grant will increase to $5,350 from $4,731. These need-based federal awards, which don't need to be repaid, generally go to students whose families earn less than $50,000 annually. You must fill out the Free Application for Federal Student Aid to apply for this grant. Interest rates on new subsidized Stafford undergraduate loans will fall to 5.6% from 6%. Subsidized Stafford loans are awarded based on need, with a maximum loan amount of $3,500 per year for Freshman, $4,500 per year for Sophmores, $5,500 per year for Juniors and Seniors. The govenment pays the interest on these loans while the student is in school. Students with unsubsidized loans, available regardless of financial need, must pay their own interest or ask to defer it. Student loan interest rates have been dropping since the 2007-2008 academic year and will fall to 3.4% by the 2011-2012 year. The rates are only applicable to loans originated in that given academic year. You cannot retroactively apply this rate to loans from the previous school year. Interest rates for Graduate and Parent PLUS loans, loans that graduate students take out for themselves or parents take out for their undergraduate children, remain at 7.9% in the direct lending program and 8.5% in the Federal Family Education Loan Program. Subsidized loans for graduate students remain at 6.8%. People who borrowed from federal sources between July 1, 1998, and June 30, 2006, have variable interest rates pegged to the May 91-day T Bill auction. The rate is at a historic low of 2.48% versus 4.21% last year, during the repayment period and 1.88% versus 3.61% while the students are in school and during the six-month post-graduation grace period. If you fear rates may increase again in July 2010 now would be a good time to consolidate those pre-2006 loans. You can lock in a 2% rate on Stafford loans while still in school or during the grace period, or 2.5% while in repayment. PLUS loans can be locked in at 3.38% interest rate. Upfront fees for Stafford loans will fall to 1.5% from 2% of the loan amount. These fees are levie