Interest rates for federal student loans available to undergraduates will fall to 3.76% from 4.29%. That could amount to savings of as much as $360 over the life of your loan. Some college students don’t fully grasp what borrowing money will mean for their financial future.
There are a few different types of federal student loans, and they come with different interest rates. Here’s the rundown.
Loans for undergraduates: 3.76% (down from 4.29%)
Loans for graduate students: 5.31% (down from 5.84%)
If students max out on how much they borrow and still need more money to cover tuition, parents can help them out by taking out a federal PLUS loan — but those come with higher interest rates.
PLUS Loans for parents: 6.31% (down from 6.84%)
Interest rates on federal student loans are reassessed annually and are tied to the rate for the 10-year Treasury note. Rates on loans for undergrads have been cut nearly in half since the most recent high of 6.8% between 2006 and 2009.