Yesterday brought breaking news for student loan borrowers: we now know what Federal Direct Loan interest rates will be for the 2014/15 school year! Though rates are officially set for the upcoming academic year based upon the 10-year Treasury Note rate in effect on June 1st, the U.S. Treasury Department just held its last scheduled Treasury Note auction prior to that June 1st deadline, giving us a sneak preview of next year’s rates. For loans disbursed between July 1, 2014 and June 30, 2015, interest rates will be as follows:
- Undergraduate Direct Loans: 4.66% (up from 3.86% in 2013/14)
- Graduate Unsubsidized Direct Loans: 6.21% (up from 5.41% in 2013/14)
- Direct PLUS Loans (for parents and graduate students): 7.21% (up from 6.41% in 2013/14)
Unfortunately for borrowers, these rates represent a 0.8% increase over last year’s rates. See last summer’s blog post regarding how federal education loan interest rates are set, and note that these new rates only apply to loans disbursed during the 2014/15 academic year. They do not affect loans borrowed by continuing college students in prior years, nor student loans in repayment.
For borrowers currently repaying student loans, Senator Elizabeth Warren just introduced legislation known as the “Bank on Students Emergency Loan Refinancing Act,” which would allow borrowers of higher interest rate student loans to refinance their debt at today’s lower interest rates. Check out our take on Warren’s proposal and alternative student loan reform ideas, and let us know what you think about the latest student loan news using the comments section below.