UPDATE MAY 12, 2020
Federal student loan interest rates fell to its lowest level.
Here’s what you need to know – and what it means to you.
Colleges and graduate studies will get a lot cheaper starting this fall. This is good news for students and parents who borrow student loans to finance their education. While tuition fees aren’t going down, interest rates on new federal student loans will be significantly lower than last year, which can save you money. Each May, Congress (not the United States Department of Education) sets federal student loan interest rates for the upcoming school year based on a 10-year treasury. Treasury yields have fallen over the past year due to several interest rate cuts by the Federal Reserve and COVID-19, among other factors. The new interest rates are effective July 1, 2020 through June 30, 2021. Here are the new federal student loan rates based on the 10-year Treasury yield of 0.70% as of May 12, 2020:
Undergraduate student loans (subsidized and unsubsidized)
- Current rate: 4.53%
- New price: 2.75%
Graduate student loans (unsubsidized)
- Current rate: 6.08%
- New price: 4.30%
Parent PLUS Loans and Grad PLUS Loans (PLUS Loans)
- Current rate: 7.08%
- New price: 5.30%
Student loans: questions and answers
Are these new rates affecting existing student loans?
Unfortunately, these new rates only apply to New federal student loans borrowed between July 1, 2020 and June 30, 2021.
Do these new rates also apply to private student loans?
Unfortunately, the new rates do not apply to private student loans. The rates for private student loans are governed by individual private lenders. If you need private student loans, the good news is that private student loan interest rates have historically been low. very slow as well as.
Who will benefit the most from these new student loan rates?
Anyone planning to borrow federal student loans between July 1, 2020 and June 30, 2021 will benefit from the new student loan rates. This can include undergraduates, graduate students, parents and grandparents who borrow student loans. With these lower interest rates for student loans, students can choose to return to campus this fall, rather than take a gap year or postpone admission due to COVID-19.
My student loan payments are already suspended under the CARES Act. How does this affect me?
If your existing federal student loans are currently on hold and your interest rate is temporarily 0%, you are already paying off student loans. These rate changes apply only to new federal student loans. That said, if you are already paying off federal student loans and planning to borrow new federal student loans for the fall semester, for example, you could benefit from the CARES Act and the lower interest rate on your new loans. students. Remember that the benefits of the CARES Act (absent a Congressional prorogation) will expire on September 30, 2020. Thereafter, you will resume federal student loan payments at your regular interest rate.
How can I get a lower interest rate on my student loans?
Refinancing student loans is the best way to get a lower interest rate. This is especially true now because student loan refinance rates are incredibly cheap. You can refinance federal student loans, private student loans, or both. Undergraduate, graduate and parent PLUS loans are all eligible. When you refinance student loans, you receive a new student loan from a private lender, which is used to pay off your old student loans. If you’re struggling to pay off your student loans or need access to income-based repayment plans, federal student loan refinancing is not recommended for you. However, if you want a lower interest rate so that you can pay off your student loans faster, student loan refinancing helps you get a student loan, monthly payment, and lower interest rate. The lower interest rate is what saves you money each month.
This student loan refinance calculator shows you how much money you can save by refinancing a student loan.
Student loan repayment options
Whether you’re already in the process of paying off a student loan or considering borrowing new student loans, make sure you have a solid student plan to pay off your student loans. These four options are a good place to start: