Education Dept. announces highest federal student loan interest rate in more than a decade

CNBC

Annie Nova

May 14, 2024

KEY POINTS

• The U.S. Department of Education announced Tuesday the interest rates on federal student loans for the 2024-2025 academic year.

• The interest rate on federal undergraduate loans will be 6.53%, the highest rate in at least a decade, according to higher education expert Mark Kantrowitz.

The U.S. Department of Education announced 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 an 8.08% interest rate, compared with 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 more than 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.

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