During the 2018-19 academic year, federal student loan interest rates were set at 5.05% for undergraduate loans. Federal Direct Parent PLUS loans were at 7.6%, and Federal Direct Graduate PLUS loans were pegged at 6.6%.
Interest rates for the 2019-20 academic year will be decreasing to 4.53% for subsidized and unsubsidized loans for undergraduates. Federal Direct Parent PLUS loans will be set at 7.08%. Federal unsubsidized loans for graduate and professional students will decrease to 6.08%. (Learn more about federal student loans here.)
If you’re going to be attending college in the coming year, these lower interest rates are great news. Currently, around 70% of students who are taking out student loans to attend college.
Private Student Loan Interest Rates
Private student loans are run by private lending institutions. This means interest rates vary by lender. Other factors can also affect student loan rates including your personal credit score.
There’s no need to worry, though, if you do not yet have a credit rating or if it’s low. You can get a cosigner to sign with you, which can help you to qualify for a private student loan. (However, credit is not a factor in determining your ability to borrow a federal student loan.)
The Domino Effect
Much of what happens in the political arena creates a “domino effect” in the financial world. In this case, the reduction in student loan interest rates should help you pay less in interest over the life of a loan.
Do your own research and find out what is going on in the political world. It may have a bigger impact on you than you might think!