How do federal student loan interest rates and origination fees work, and are they fixed?

Federal student loans carry fixed interest rates set each year for loans first disbursed between July 1 and June 30, based on a formula tied to the 10-year Treasury note. Your rate is locked for the life of the loan, which is a big advantage over most private loans. The Department of Education publishes the new rates each spring at studentaid.gov, and they differ by loan type: Direct Subsidized and Unsubsidized loans for undergraduates get the lowest rate, graduate Unsubsidized loans a higher one, and PLUS loans the highest. Federal loans also charge a one-time origination fee deducted from each disbursement, so you receive slightly less than you borrow. On subsidized loans, the government pays the interest while you're in school; on unsubsidized loans, interest accrues from day one.