How are loan interest rates figured?

I was wondering about arbitraging my future federal loans. Federal interest rates are about as low as they’re likely to go (1.6% or so), while I don’t need any money right now, I was wondering if there is any advantage in taking out a loan now, if it “fixes” the interest rate for future loans at the lower (todays) rate.
So, the question is, when you get a new loan, does the rate change? Stay the same? Do the rates on all loans get adjusted to the new (current at that time) rate?
Unfortunately, the CC I’m doing my post-bac premed at has a minimally experienced financial aid office staff. Once they discovered that I couldn’t get a Pell grant they decided that they’ve pretty much done all they can for me. Asking them this question would probably instigate a federal investigation.

You can’t take out a loan in anticipation of your need - loan monies underwritten by the Federal government go directly to your educational institution. (sorry!)
the Stafford loan rate is pegged to the 91-day T-bill rate and is set for the coming year in June. Current forecasts are that the rate for the coming year will remain ridiculously low (but not the 1.6% you quote, current rate is 2.8%). Currently, the rate is fixed for the life of the loan but Congress is considering making the rates variable. (something tells me this will not be decided on during an election year.) The other thing is that while the rate is fixed for the life of the loan, you are almost certain to end up changing things around following graduation by consolidating all your loans and locking them in at a new fixed rate (this is also being considered for variable rates instead). Hope this helps.

Thanks. I understand that the loan is based on need, fortunately I was “lucky” enough to earn zero in 2002 and nearly that in 2003 so my FAFSA looks pretty good, with an EFC of about $2K. It helps to have most of my wealth such as it is tied up in a house. I do qualify for stafford loans, based on the annual budget my CC has (which oddly enough works out to the max available).
I am still a bit unsure about how subsequent loans are handled - are they “added onto” the first loan? Are they new loans altogether, with new interest rates?
And, how are the loans handled when changing schools?
BTW, CONGRATS!! on graduation and your residency. Your personal story has been very inspiring to me, and I hope that I’ll be following your path in a year or so.

each loan is separate, with the interest rate in place for that year. In my first two years, the loans are per semester so there are four of them (I forget if the interest rate changed between years 1&2). In the clinical years, the entire disbursement is up front so there are two more loans, and they are definitely at the ultra-cheap interest rate.

When I consolidate all of these loans, they’ll be lumped together with one interest rate from then on out. The whole topic of consolidating gives me a big headache and you do NOT have to think about it yet!

With your EFC you’ll qualify for maximum subsidized Stafford loans, which is good. The government pays the accruing interest on those throughout school. Mine are mostly unsubsidized which means that at this point my indebtedness is not much different from my mortgage.

Changing schools - loans you’ve already had stay with that lender. You can probably continue with the same lender at a new school, or you may switch. When you consolidate, you’ll put them all back into one basket but you don’t have to do that while you’re in school.

I only know something about this after having sat through our financial aid exit interviews, and I’m still trying to process all the details. I will say this: I don’t know about other med schools, but GWU’s financial aid folks are GREAT. They are an invaluable resource and they’ve helped me a lot.

Another thing I don’t know anything about is how undergrad/grad school loans factor into this whole mix. I gather that you can defer further payment on these when you go back to school. I also gathered that if you want, you can wrap those old loans into a new consolidated loan that incorporates everything (u’grad, grad, med school). Seeing as those old loans are probably at a higher interest rate, this would seem to be a good thing.

This thread contains more stuff about financial aid and explains a little more about consolidation.

Hope this helps!