The new rates apply only to new federal loans, not to existing or private student loans
The Department of Education notified this week that federal student loan interest rates would increase beginning July 1, marking their highest levels in over a decade, per NBC estimates.
These new rates apply only to new federal loans, not to existing or private student loans.
Per the new rate hikes
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Undergraduate loan rates will rise from 5.5% to 6.53%, translating to $113.72 per $10,000 borrowed, up from $108.52.
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Graduate student loan rates will increase from 7.05% to 8.08%, amounting to $121.77 per $10,000, compared to $116.36.
Why?
The increase is driven by lenders seeking higher returns to combat inflation.
Student loan interest rates are also determined by adding a set percentage to the current yield on 10-year Treasury notes, which recently hit 4.483%.
With the price of attending college already exceeding $90,000 a year in some parts of the country, it remains uncertain if President Joe Biden’s administration will intervene to prevent or reduce these rate hikes.
Biden’s current focus includes new debt cancellation plans after the US Supreme Court blocked an earlier effort.