Student loan interest rates will rise by about 1 percentage point
What would you like to know
- The new undergraduate student loan rate will be 3.734% for the 2021-2022 academic year, down from 2.75%.
- Over the past 10 years, rates are still relatively low, says Mark Kantrowitz.
- Student loan interest rates are based on the 10-year Treasury auction in May; the rates on graduate student loans and PLUS loans are higher.
Federal student loan interest rates for the 2021-2022 academic year will be nearly a percentage point higher than for the current academic year.
Based on the results of the latest 10-year Treasury auction, which is used as the basis for calculating federal student loan rates, the new rate for federal undergraduate student loans will be 3.734% – down from 2.75 %, a record high, but still the fourth lowest rate in the past 10 years, according to Mark Kantrowitz, a student loans and financial aid expert.
For graduate students, the new loan rate will be 5.284%, down from 4.3%, and for Grad PLUS and Parent PLUS loans, the rate will be 6.284%, down from 5.3%.
The new rates are based on a federal government formula that sets loan rates at a premium spread over the high yield at the 10-year Treasury auction in May. The high yield on this year’s auction, conducted on May 12, was 1.684%. Add to that 2.05% for undergraduate loans, 3.6% for graduate student loans, and 4.6% for all PLUS lines and you get the actual loan rates for the upcoming academic year. .
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The new, higher rates will cost student loan borrowers up to $ 590 for every $ 10,000 of loans repaid over 10 years, according to Kantrowitz.