Federal 2023-2024 student loan interest rates have been announced, and they are the highest they have been in over a decade.
Federal 2023-2024 Student Loan Interest Rates
In a published article in WKRN News, the 2023-2024 student loan interest rates for undergraduate direct subsidized loans are at 5.5%, the highest since the 2009-2010 school year. Graduate students will face a 7.05% 2023-2024 student loan interest rate for direct loans, while PLUS loans for graduate students and parents will have an 8.05% interest rate.
These higher 2023-2024 student loan interest rates have implications for incoming and current students. As 2023-2024 student loan interest rates rise, borrowers end up paying more on the amount they borrow. For example, a $5,000 unsubsidized federal direct undergraduate loan on a 10-year repayment term will cost an additional $150 in interest under the new 5.5% rate compared to the previous 4.99% rate.
It is important for students and families considering new federal loans to carefully evaluate the implications of these rate changes, as highlighted by the National Foundation for Credit Counseling. The increase in federal 2023-2024 student loan interest rates comes as borrowing costs are rising in various areas, including car loans, mortgages, and private student loans.
It is worth noting that these new federal 2023-2024 student loan interest rates only apply to federal student loans taken out for the 2023-2024 academic year. Existing federal loans are not affected by the rate changes.
How are the Federal 2023-2024 Student Loan Interest Rates Determined?
The setting of student loan interest rates is closely related to the larger economic market trends. Bank Rate reported that Congress determines the federal student loan interest rates. It will be based on the high yield for the last 10-year Treasury note auction last May. The private student loan interest rates tend to follow these federal rates.
Students and borrowers to stay informed about these changes in 2023-2024 student loan interest rates and carefully consider their implications for borrowing and repayment. Exploring financial aid options, scholarships, and considering private loan options can help mitigate the impact of higher interest rates on the overall cost of education.