Student Loan Rates Increase Today — Here’s Why And What To Do

Student loan interest rates will go up starting today.

You need to know – and what can be done about it.

Student Loans

Student loans will be more expensive for the coming school year. Here are the new rates for all federal student loans taken out after July 1, 2021:

Student Loans (Subsidized and Unsubsidized)

  • Current rate: 2.75%
  • New tariff: 3.73%

Student Loans (Unsubsidized)

  • Current rate: 4.30%
  • New tariff: 5.28%

Parent PLUS Loans and Grad PLUS Loans (PLUS Loans)

  • Current rate: 5.30%
  • New tariff: 6.28%

Why Are Student Loans More Expensive? Each May, Congress sets federal student loan interest rates for the upcoming school year based on an auction of 10-year treasury bills. The new interest rates will apply from July 1, 2021 to June 30, 2022 and the interest rates will be 0.98% (percentage points) higher. Unlike last year when student loan rates fell, student loans are becoming more expensive for all student borrowers taking out federal student loans for the upcoming school year.

Student Loans: Questions and Answers

Which student loans are affected?

The new interest rates apply to student loans (both subsidized and unsubsidized), student loans (unsubsidized), and PLUS direct loans (including parent PLUS loans and PLUS loans for college or professional degrees such as law, business, medicine, or dentistry). for example).

Will this affect my student loans?

If you have student loans, the new interest rates won’t affect your existing federal student loans. When you take out new student loans, you pay the higher interest rate on those new student loans.

Do these rates apply to personal student loans?

No, these student loan interest rates only apply to federal student loans. Personal loans have separate interest rates set by the lender from whom you are borrowing. The important thing is that you check to see if your personal loan has a floating rate. If so, the interest rate on your student loan on your existing student loans may change (increase or decrease) as interest rates change.

Are these new student loan rates fixed or floating?

All federal student loans are fixed rate loans. That means your interest rate won’t change no matter what happens to the interest rates.

Can I take out a student loan now to get the lower interest rates?

Unfortunately, before July 1, 2021, you cannot take out new federal student loans for the upcoming school year to receive a lower interest rate. So, if you take out a student loan, you need to borrow it after July 1st.

My student loan is currently on hold. Does that affect me?

Federal student loan payments are currently suspended until September 30, 2021 through a temporary deferral of student loans. The interest rates for federal student loans are temporarily set at 0%. However, this student loan relief only applies to ongoing student loans. This rate hike applies to newly taken out student loans. When this student loan relief expires, your state student loan payments and regular interest rate will resume from October 1, 2021. It is possible for President Joe Biden to extend this relief beyond September 30, but without an extension, expect a fresh start. Student loan repayment on October 1st

How can I get lower interest rates on my student loan?

Student loan refinancing is the best way to get a lower interest rate on your student loans, whether they are federal or personal. Currently, student loan refinancing rates are at an all-time low, which means you may get a lower interest rate than your current interest rate. This can help you save money, pay off student loans faster, and get rid of debt. You can refinance federal student loans, private student loans, or both. You can also refinance undergraduate, graduate, PLUS, and Parent PLUS loans. When you refinance a student loan, you get a new, one-time student loan with a lower interest rate and a monthly payment. You can choose between a fixed or variable interest rate and a term of 5 to 20 years for the student loan.

To refinance your student loans, you need good to strong credit (usually 650 or higher), an employment or job offer, stable monthly income, and monthly cash flow to pay for your student loans and other living expenses. The good news is that you can apply online and there are several lenders to choose from. If you’re struggling to pay off student loans, need income-focused repayment plans, or want to avail of a government loan waiver (or similar program), federal student loan refinancing is not recommended. If you don’t meet the requirements, you can apply to a qualified co-signer who can help you get approved and get a lower interest rate. Some lenders allow you to release the co-signer after they are approved and meet certain requirements.

This student loan refinancing calculator shows you how much money you can save by refinancing the student loan.

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