Are you planning to take out student loans soon? Be prepared to pay more for the privilege.
Every year, the federal government sets the annual percentage rates for student loans taken out in the following academic year. The rate is set based on the interest rates for ten-year Treasury notes, plus a fixed margin that varies based on the type of federal loan you’re receiving – undergraduate, graduate, or PLUS loans (for parents of students or graduates that have maxed out their graduate loan capability).
Unfortunately for student borrowers, interest rates on ten-year Treasury notes are rising just as the rates are being set for the 2018-2019 academic year. May’s rates are nearing the 3% mark, which hasn’t been seen since December of 2013.
Rates for undergraduate loans will climb to 5.05% from the current 4.45%. Graduate loans will increase to 6.60% from 6.00%. PLUS loans change to 7.6% from 7%. These changes represent increases of 13.5%, 10%, and…