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Ah, you've got two things going on here.

One is the "timely payer" discount of 80 basis points (".8%") that is running from October 2000 to September 30, 2001.

The 5.99% starting July 1 is the ordinary interest rate on a Stafford loan of recent vintage (1998 or later). This would be a loan whose interest rate is calculated as May 29 auction 91-day T-bill plus 230 basis points (2.3%). What many of us are going to do is consolidate after July 1, because the government will take the 5.99% (rounded to the next highest eighth, or 6%) and allow the .8% timely payer discount. There will be then a "new" rate of only 5.2%.

This rate is fixed for the life of the loan, as long as the first twelve payments are made on time. Otherwise, the consolidation is at 6% fixed.

If the loan is not consolidated, the rate is 5.99% starting July 1, and may be a different (higher) rate each later July 1. The loan remains interest rate remains variable.
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