The U.S. Department of Education sign hangs at the entrance to the federal building housing the agency’s headquarters in Washington, DC, February 9, 2024.
J.David Ake | Getty Images
The U.S. Department of Education announced federal student loan interest rates for the 2024-25 academic year on Tuesday.
The interest rate on Federal Direct Undergraduate Loans will be 6.53%. That’s the highest rate in at least a decade, according to higher education expert Mark Kantrowitz. The undergraduate rate for the year 2023-2024 is 5.5%.
For graduate students, loans will carry an interest rate of 8.08%, compared to the current 7.05%. Additionally, loans for graduate students and parents will have an interest rate of 9.08%, compared to the current 8.05%. Both rates haven’t been this high in more than 20 years, Kantrowitz said.
Rising interest rates could complicate the Biden administration’s efforts to bring the student loan crisis under control and relieve borrowers of the burden of accumulating interest, experts say. Even though millions of people have benefited from recent debt relief measures, new students will be saddled with more expensive loans for decades.
Which borrowers face higher rates
All federal student loans issued on or after July 1, 2024 will be subject to the new rates.
Sorry, families: You can’t try to escape the rate increase by borrowing before this deadline. Loans for the 2024-25 academic year must be taken out after July 1.
Don’t worry about loans you took out in previous college years: Most federal student loan rates are fixed, meaning the rates on these existing loans won’t change.
The rate changes only apply to federal student loans. Private loans come with their own, often higher, interest rates.
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