![]() ![]() The average private fixed-rate undergrad student loan charges 5.99% to 13.78% in interest, according to a January 2023 NerdWallet analysis. In recent years, federal student loans have offered lower interest rates (and fees) than private alternatives, but that may no longer be true for some borrowers. » MORE: Fixed or variable student loan: which is better? Federal vs. It’s important to note that all federal student loans have fixed interest rates, so they won’t change during the repayment period. The higher rates will apply to all students who take out new federal loans for college or graduate school in the 2023-24 academic year. If you’d started college in 2020-21 and taken out the same $31,000 federal loan with a record-low 2.75% interest rate, you would’ve had to repay around $39,500 including interest over 10 years. Today, nearly 44 million people collectively owe roughly $1.6 trillion in outstanding federal student loans - and federal loans account for about 93% of the total student debt burden, according to a NerdWallet analysis of Department of Education and Federal Reserve data.įor example, if you start college this fall and borrow a total of $31,000 in unsubsidized federal direct loans (the maximum loan amount for dependent undergraduates) with a 5.50% interest rate, you’ll wind up paying back almost $50,000 under a standard 10-year repayment plan. Ultimately, charging more interest will make college more expensive for the millions of college students and their families who take out loans. The final rates apply to new loans doled out starting July 1. ![]() Treasury’s May 10-year note auction yield with an additional “add-on” percentage, which varies depending on loan type. Each year, usually in mid- to late May, the government sets fresh federal student loan interest rates for the academic year ahead by adding the U.S. Higher interest rates mean paying off loans will cost more. Interest rates on direct graduate loans and PLUS loans, introduced with fixed rates in 2006, have never been this high. Undergraduate direct student loan interest rates haven’t been this high since 2013. Here are the higher 2023-24 rates for each type of federal student loan, compared with the 2022-23 academic year: PLUS loans, which parents and grad students can use to fill in education funding gaps, will jump to 8.05% from 7.54%. Interest rates on graduate direct loans, available to graduate and professional students, will rise to 7.05% from 6.54% the year prior. ( NerdWallet) – College will cost more for students borrowing during the 2023-24 academic year as federal student loan interest rates climb to heights not seen in a decade or longer.Īs of July 1, undergraduates who take out new direct federal student loans will see interest rates rise to 5.50%, the Education Department’s Federal Student Aid office said Tuesday - up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22. ![]()
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