{"id":12548,"date":"2023-05-23T08:10:44","date_gmt":"2023-05-23T12:10:44","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/run-dont-walk-to-apply-for-college-grants-student-loan-interest-rates-are-highest-in-10-years\/"},"modified":"2023-05-23T08:10:45","modified_gmt":"2023-05-23T12:10:45","slug":"run-dont-walk-to-apply-for-college-grants-student-loan-interest-rates-are-highest-in-10-years","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=12548","title":{"rendered":"Run, don\u2019t walk to apply for college grants: Student loan interest rates are highest in 10 years"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002078974\" role=\"document\">\n<p><em>This <\/em><em>article <\/em><em>is reprinted by permission from <\/em><em>NerdWallet<\/em><em>.\u00a0<\/em><\/p>\n<p>College will cost more for students borrowing during the 2023-24 academic year as federal\u00a0student loan interest rates\u00a0climb to heights not seen in a decade or longer.<\/p>\n<p>As of July 1, undergraduates who take out new direct federal student loans will see interest rates rise to 5.50%, the Education Department\u2019s Federal Student Aid office said Tuesday \u2014 up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.<\/p>\n<div class=\"paywall\">\n<p>Interest rates on graduate direct loans, available to graduate and professional students, will rise to 7.05% from 6.54% the year prior. PLUS loans, which parents and grad students can use to fill in education funding gaps, will jump to 8.05% from 7.54%. Here are the higher 2023-24 rates for each type of federal student loan, compared with the 2022-23 academic year:<\/p>\n<ul class=\"articleList\">\n<li>\n      Undergraduate direct loans: 5.50%, up from 4.99%.<\/p>\n<\/li>\n<li>\n      Graduate direct loans: 7.05%, up from 6.54%.<\/p>\n<\/li>\n<li>\n      PLUS loans: 8.05%, up from 7.54%.<\/p>\n<\/li>\n<\/ul>\n<p>Undergraduate direct student loan interest rates haven\u2019t been this high since 2013. Interest rates on direct graduate loans and PLUS loans, introduced with fixed rates in 2006, have never been this high.<\/p>\n<p><strong>Learn more:<\/strong> Here\u2019s how to decode your college financial aid package<\/p>\n<h2><strong>Rising rates makes college pricier<\/strong><\/h2>\n<p>Higher interest rates mean paying off loans will cost more. Each year, usually in mid- to late May, the government sets fresh federal student loan interest rates for the academic year ahead by adding the U.S. Treasury\u2019s May 10-year note auction yield with an additional \u201cadd-on\u201d percentage, which varies depending on loan type. The final rates apply to new loans doled out starting July 1.<\/p>\n<p>Ultimately, charging more interest will make college more expensive for the millions of college students and their families who take out loans. Today, nearly 44 million people collectively owe roughly $1.6 trillion in outstanding federal student loans \u2014 and federal loans account for about 93% of the total student debt burden, according to a NerdWallet analysis of Department of Education and Federal Reserve data.<\/p>\n<p>For example, if you start college this fall and borrow a total of $31,000 in unsubsidized federal direct loans (the maximum loan amount for dependent undergraduates) with a 5.50% interest rate, you\u2019ll wind up paying back almost $50,000 under a standard 10-year repayment plan. If you\u2019d started college in 2020-21 and taken out the same $31,000 federal loan with a record-low 2.75% interest rate, you would\u2019ve had to repay around $39,500 including interest over 10 years.<\/p>\n<p>The higher rates will apply to all students who take out new federal loans for college or graduate school in the 2023-24 academic year. It\u2019s important to note that all federal student loans have fixed interest rates, so they won\u2019t change during the repayment period.<\/p>\n<p><strong>Related:<\/strong> More U.S. high-school graduates are forgoing college, data indicate. Here\u2019s why.<\/p>\n<h2><strong>Federal vs. private student loan interest rates<\/strong><\/h2>\n<p>In recent years, federal student loans have offered lower interest rates (and fees) than private alternatives, but that may no longer be true for some borrowers. The average private fixed-rate undergrad student loan charges 5.99% to 13.78% in interest, according to a January 2023 NerdWallet analysis. As a result, private loans may start to look more attractive.<\/p>\n<p>However,\u00a0private student loans have drawbacks. They usually require a student to have a high credit score \u2014 or a co-signer with a high credit score \u2014 to qualify for the lowest rates. The co-signer, typically a parent, is equally responsible for the loan. Federal student loans don\u2019t allow co-signers, and only federal PLUS loans require a credit check.<\/p>\n<p>Federal loans also offer benefits like payment plans that cap monthly bills at a certain percentage of your income, temporary payment pauses if you lose your job or experience financial hardship, and loan forgiveness programs. Private loans don\u2019t typically offer these protections.<\/p>\n<p>Though federal interest rates still have room to climb, they could soon hit a ceiling. Under the Higher Education Act, rates may not exceed 8.25% for undergrad loans, 9.5% for grad loans and 10.5% for PLUS loans. Private student loan lenders have much higher maximum interest rates.<\/p>\n<p><strong>Don\u2019t miss:<\/strong> It\u2019s time to stop putting off going to college; here are all the reasons why (1.2 million, to be exact)<\/p>\n<h2><strong>Submit the FAFSA to minimize borrowing<\/strong><\/h2>\n<p>Minimize your total college debt \u2014 and the amount of interest you\u2019ll pay over time \u2014 by maximizing funding sources you won\u2019t have to repay, like scholarships, grants, work-study and other financial aid options.<\/p>\n<p>You\u2019ll need to submit the Free Application for Federal Student Aid, or\u00a0FAFSA, to qualify for most federal, state and school grants. That includes the federal need-based Pell Grant, which, starting in 2023-24, can give students up to $7,395 per year in free money to pay for college. Scholarships also often require applicants to submit the FAFSA, including some offered by private organizations.<\/p>\n<p>The FAFSA is open until June 30, 2024, for the 2023-24 school year, but don\u2019t delay. Fill it out as soon as possible to increase your chances of getting more money. Some types of aid draw from limited pools and can run out.<\/p>\n<p><strong>More From NerdWallet<\/strong><\/p>\n<p><em>Eliza Haverstock writes for NerdWallet. Email: ehaverstock@nerdwallet.com. Twitter: @elizahaverstock.<\/em><\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/run-dont-walk-to-apply-for-college-grants-student-loan-interest-rates-are-highest-in-10-years-5034f056?mod=personal-finance\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article is reprinted by permission from NerdWallet.\u00a0 College will cost more for students borrowing during the 2023-24 academic year as federal\u00a0student loan interest rates\u00a0climb to heights not seen in a decade or longer. As of July 1, undergraduates who take out new direct federal student loans will see interest rates rise to 5.50%, the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12549,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-12548","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Run, don\u2019t walk to apply for college grants: Student loan interest rates are highest in 10 years | iFintechWorld<\/title>\n<meta name=\"description\" content=\"This article is reprinted by permission from NerdWallet.\u00a0 College will cost more for students borrowing during the 2023-24 academic year as\" \/>\n<meta name=\"robots\" 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