The U.S. Department of Education announced on Tuesday the interest rates on federal student loans for the 2024-2025 academic year.
The interest rate on federal direct undergraduate loans will be 6.53%. That’s the highest rate in at least a decade, according to higher education expert Mark Kantrowitz. The undergraduate rate for the 2023-2024 year is 5.5%.
For graduate students, loans will come with a 8.08% interest rate, compared to the current 7.05%. Plus loans for graduate students and parents will have a 9.08% interest rate, an increase from 8.05% now. Both of those rates haven’t been as high in over 20 years, Kantrowitz said.
The rise in interest rates could complicate the Biden administration’s efforts to get the student loan crisis under control and relieve borrowers of the pain of interest accrual, experts say. Even as millions of people have benefited from recent debt relief measures, new students will be saddled with more expensive loans for decades to come.
Which borrowers face higher rates
All federal education loans issued on or after July 1, 2024, will be subject to the new rates.
Sorry, families: You can’t try to evade the rate increase by borrowing ahead of that deadline. Loans for the 2024-25 academic year must be taken out after July 1.
Don’t worry about loans you’ve taken out for previous academic years: Most federal student loan rates are fixed, meaning the rates on those existing loans won’t change.
The rate changes apply only to federal student loans. Private loans come with their own — often higher — interest rates.
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