Federal student loans are about to get even more expensive
Borrowers taking out federal student loans for the first time will likely be paying more in the upcoming academic year.
The interest rate on federal Stafford Loans for undergraduates is set to jump to 4.45% during the 2017 to 2018 school year, up from 3.76% for the 2016 to 2017 year. Graduate students and parents will also see their interest rates rise. The interest rate on Stafford Loans for graduate students is set to increase to 6% from 5.31% during the 2016 to 2017 academic year. The rate on PLUS loans, which are used by both parents and graduate students, are set to rise to 7% from 6.31%.
The Department of Education has yet to officially announce the new rates, but it’s safe to assume the cost of taking out a federal student loan will go up beginning July 1, 2017, according to Mark Kantrowitz, the publisher of Cappex.com, a college and scholarship search site. The interest rates on new federal student loans change every year and they’re tied to the May 10-year Treasury auction, which closed Wednesday. The results of that auction indicate the interest rates on federal student loans will rise about .69 percentage points, he said.
The outcome of the Treasury auction is influenced by the Federal Reserve’s approach to interest rates. The historically low interest rate environment over the past few years has been good to student loan borrowers. “The Federal Reserve has been very timid in increasing interest rates so we’ve had several years of relatively low rates,” Kantrowitz said. “Now that the Federal Reserve is starting to increase interest rates, especially on a more serious level, it’s jumping.”
https://www.msn.com/en-us/money/careersandeducation/federal-student-loans-are-about-to-get-even-more-expensive/ar-BBB0Km6?li=BBnbfcN
= new reply since forum marked as read
