What's Your New Student Loan Interest Rate?
What's your new student loan interest rate?
The new student loan rates will begin on January 1.
Here's what you need to know, and the implications it has for your student loans.
Student Loans are financial aid that enable students to pay for their education.
Starting July 1, 2022, student loans will be even more expensive. That's bad news for borrowers who already have faced high inflation on things like groceries and gas. With uncertainty around student loan forgiveness and the student loan payment pause, it's clear why borrowers are feeling the student loan blues. Here are the new federal interest rates for new loans:
Federal student loans (Subsidized and Unsubsidized) are available to students who have not yet earned a bachelor's degree.
- The new interest rate is 4.99%.
- At the time of writing, the interest rate was 3.73%.
Loans (Unsubsidized) for graduate students
- The new interest rate is 6.54%.
- As of April, 2017, the interest rate on the average credit card was 5.28%.
Loans that are available to parents and graduate students are called Parent PLUS Loans and Grad PLUS Loans (PLUS loans).
- The new interest rate is 7.54%
- At the time of writing, the prime rate is 6.28%.
Student Loans: Answers to Frequently Asked Questions
Why will student loans be more expensive?
Federal student loan interest rates are rising. Each May, the U.S. Congress sets federal student loan rates for the upcoming academic year based on an auction of 10-Year Treasury notes. As the Federal Reserve has increased interest rates to keep inflation in check, consumer debt is becoming more expensive.
How much more expensive will student loans be?
Because of the interest rate hike, student loan rates will increase by 1.26 percentage points. In percentage terms, this is a big jump:
The percentage of undergraduates with loans in the United States is 33.8%.
The average graduate student loan debt is $23,900.
About 20% of the students in the U.S. who have an eligible FAFSA are using a Direct PLUS Loan to finance their education
Will these higher interest rates affect my student loans?
If you have existing federal student loans or plan to borrow new ones, your interest rate will not change. A fixed interest rate means that the interest rate will not change. If you take out a new federal student loan, however, you will pay the new interest rate. Private loans are available through private lenders and may have variable or fixed rates; variable rates can change each month as underlying rates do. If you aren't sure which student loans you have, contact your student loan servicer to find out if your interest rates will change on that basis.
Does my student loan have a fixed or variable interest rate?
Federal student loans have fixed interest rates, and the federal government offers fixed-rate loans only.
How to get a lower interest rate on your student loans
Refinancing your student loans can help you save money, pay off your debt more quickly, and get out of debt. Student loan refinancing is the best way to lower your interest rate.
You can choose a fixed or variable interest rate and a student loan repayment term from 5 to 20 years, in addition to the lower interest rates.
To refinance your student loans, you need a credit score of at least 650, be employed or have a job offer, have stable monthly income, and have monthly cash flow to pay your student loans and other living expenses.If you are pursuing public service loan forgiveness or need an income driven repayment plan, for example, then federal student loan refinancing is not recommended (but you should refenorhize your private loans). If you can’t get approved on your own, apply with a qualified cosigner who can help you get approved and get a lower interest rate.
