College Loan Advice Breaking News: Student Loan Interest Rates Hit Historic Highs Written by Shannon Vasconceloson May 8th, 2024 I came to College Coach with close to 10 years of experience in college financial aid offices. I began my career at Boston University, where I counseled students and their parents on the financial aid process and reviewed undergraduate financial aid applications. At Tufts University, where I served as assistant director of financial aid, I developed expertise in the field of health professions financial aid. I was responsible for financial aid application review, grant awarding and loan processing, and college financing and debt management counseling for both pre- and post-doctoral dental students. I have also served as an active member of the Massachusetts Association of Student Financial Aid Administrator’s Early Awareness and Outreach Committee, coordinating early college awareness activities for middle school students; as a trainer for the Department of Education’s National Training for Counselors and Mentors, educating high school guidance counselors on the financial aid process; and as a volunteer for FAFSA Day Massachusetts, aiding students and parents with the completion of online financial aid applications. Learn More About Shannon paying for college, student loans, student loan interest rates, by Shannon Vasconcelos, former financial aid officer at Tufts University Attention high school seniors, continuing college students, and all of their parents: In news coming out of the U.S. Department of the Treasury today, we now know what federal student loan interest rates will be for the upcoming school year. For students and parents borrowing loans between July 1, 2024 and June 30, 2025, interest rates will be as follows:Subsidized and Unsubsidized Direct Loans for undergraduate students: 6.53% (up from 5.50% in 2023/24)Unsubsidized Direct Loans for graduate students: 8.08% (up from 7.05% in 2023/24)Direct PLUS Loans for graduate students and parents of undergraduate students: 9.08% (up from 8.05% in 2023/24)This is the highest rate we’ve seen on the Subsidized Stafford Loan since the 2007/08 school year, and the highest rate we’ve ever seen on a fixed rate Federal PLUS Loan. As anyone shopping for a mortgage lately will know, interest rates across sectors have increased precipitously over the past couple of years, and student loan rates move in line with other rates in the economy. These new student loan rates represent an increase of more than a full percentage point over last year’s rates, costing the average undergraduate student loan borrower an additional $400 over the life of next year’s loan, based upon dependent undergraduate annual loan limits ranging from $5,500 to $7,500 per year. Unfortunately, the rate increase could cost undergraduate parent and graduate student borrowers fully funding a year of schooling through federal loans ten times that amount. Note that these new interest rates apply only to loans borrowed for the 2024/25 academic year. Previously borrowed federal student loans are unaffected, as are loans borrowed after July of 2025. Future borrowers can only hope that inflation will continue to slow and that the Federal Reserve Board will begin to decrease interest rates soon. As always, students and parents can minimize borrowing by saving in advance, maximizing scholarship funding, and utilizing interest-free tuition payment plans. In light of rising loan rates, it’s become more important than ever to choose your college carefully, budget sensibly, and borrow wisely. Work with our college finance experts to help you determine the best way to pay for college. Find Out More Related Resources Read | Posted on November 4th, 2024 Recent Graduates: Time to Pay Student Loans, but… It’s Complicated Read | Posted on June 25th, 2024 What Happens After Committing to a College: Financial Edition Read | Posted on June 18th, 2024 Updates for Borrowers Planning for Student Loan Forgiveness
