Interest Rates on Federal Student Loans for the 2024-2025 Academic Year

Federal Student Loan Interest Rates Set To Rise for 2024-25 Academic Year

The new interest rates on federal student loans for the upcoming academic year have been announced, and they are set to rise significantly. The interest rates are fixed for the life of the loan and apply to loans disbursed between July 1 and June 30.

The increase in interest rates is due to the high yield of the last 10-year Treasury Note auction in May, which was influenced by the Federal Funds Rate set by the Federal Reserve Board. The Federal Reserve Board has been keeping the rate high to control inflation, which remains above the 2% target.

The new interest rates for 2024-25 federal student loans are as follows:
– 6.533% for undergraduate Federal Direct Stafford Loans
– 8.083% for graduate Federal Direct Stafford Loans
– 9.083% for Federal Direct Grad PLUS Loans
– 9.083% for Federal Direct Parent PLUS Loans

Compared to last year, this is an increase of 1.035% and a significant 3.783% increase compared to the record low reached in 2020-21 during the pandemic.

The rise in interest rates will impact the monthly student loan payments, with an increase of about $5.20 to $5.54 per $10,000 borrowed for a 10-year repayment term. This increase will affect students and families borrowing federal student loans for the upcoming academic year.

While interest rates on private student loans also vary, they typically range from about 4.5% to 16.5% for fixed rates and 5.5% to 18% for variable rates. It is important for students to carefully consider their loan options and repayment terms to make informed decisions about financing their education.