Student Loan Interest Rates

Current student loan interest rates and ranges for 2023

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The interest rate on a federal undergraduate student loan for the 2023-2024 academic year is 5.50%, up from 4.99% in the previous academic year and the highest level reached since 2008. If you're looking to take out a new private student loan, your rate for a? fixed-interest loan will range between 4.41% and 16.99%, according to lending marketplace Credible.

Before taking out student loans, there are important things to consider, particularly in this volatile economic climate. In June 2023, the Supreme Court blocked a plan by the Biden administration to grant broad debt forgiveness to student loan borrowers. Two months later, the White House responded by unveiling the Saving on a Valuable Education (SAVE) plan, which makes it easier for students to pay back their loans and qualify for debt forgiveness.

Additionally, the COVID-19 moratorium on student loan interest and repayments has come to an ed. Interest resumed on September 1, 2023, while the first payments were due in October.

Key Takeaways

  • The COVID-19 moratorium on student loan interest ended on September 1, 2023, with student loan payments resuming the following month.
  • Interest rates are 5.50% for new federal undergraduate loans, 7.05% for graduate loans, and 8.05% for parent PLUS loans.
  • Private student loan interest rates vary by lender and whether the loan has a fixed or variable interest rate.
  • As of September 2023, Credible, a student loan marketplace, listed fixed rates starting at 4.41% and variable rates starting at 5.36%.

Private Student Loan Interest Rates

Private lenders set a range for interest rates. Your actual rate will be based on the creditworthiness of you and your cosigner.

In the table below, you can see the current rates from the loan marketplace Credible. Annual percentage rates (APRs) on Credible start at 4.41% for a fixed-rate private student loan as of September 2023.?These rates reflect the rates offered by a variety of lenders on the marketplace. Individual lenders will each have their own range, which may be a bit narrower.

Loan Type Fixed APR Variable APR
Undergraduate and Graduate 4.43% to 16.99% 5.36% to 16.99%
Refinance 4.85% to 11.83% 5.28% to 14.48%

Federal student loans do not take into account credit scores and income. However, these factors play a big role in private lenders’ decisions. Students who don’t meet lenders’ credit requirements will need a cosigner. About 90% of private student loans are made with a cosigner.

However, even if you don’t have a good credit score or a cosigner, there are lenders that offer student loans for bad credit and student loans without a cosigner.

Try to take out no more in student loans than what you expect to make in your first year out of school.

Federal Student Loan Interest Rates

Between July 1, 2023, and June 30, 2024, federal student loan rates for new undergraduate loans are 5.50%. New graduate loan rates are 7.05% and new parent PLUS loan interest rates are 8.05% during that same time period. These rates change annually.

There is an origination fee of 1.057% for federal direct subsidized loans and direct unsubsidized loans. The origination fee is higher at 4.228% for parent PLUS loans. This fee isn’t added to your repayment. Instead, it’s deducted from your initial loan disbursement.

In response to the COVID-19 pandemic, the federal government paused student loan payments and set interest rates set to 0%. This relief came to an end in 2023. Interest resumed on September 1, 2023, and the first student loan payments were due in October.

College Enrollment Trends

Fewer people are enrolling in post-secondary education.

In the fall of 2020, colleges and universities re-opened their classrooms and dorm rooms after going remote due to the pandemic. But within weeks, many schools had to once again postpone sports and other activities as widespread quarantines forced them to switch from in-person classes back to virtual ones.

As the pandemic dragged on, many thought that community colleges would see higher enrollment, but data showed that fall enrollment was up for some large public universities, while enrollment at community colleges was down as much as 30% at some institutions.

By the spring of 2022, enrollment continued to exhibit worsening trends, with total post-secondary enrollment falling to around 16.2 million, a one-year decline of 4.1%. This followed a 3.5% drop the year prior. The bulk of the drop was in undergraduate enrollment, down 4.7% from the previous year. The number of individuals enrolled in undergraduate programs was down 9.4% from before the pandemic.

Enrollment began to stabilize in fall 2022, but combined undergraduate and graduate enrollment was still 5.8% lower than in 2019. By the spring of 2023, enrollment dipped another 0.5%.

Student Debt Continues to Rise

Following the 2007–2008 Great Recession, state higher education funding fell a full 25%. The share of higher education revenues paid by students rose from 36% in 2008 to 47% in 2012. This led to student loan debt that has surpassed $1.6 trillion. The debt may get worse if the education system is forced to undergo more budget cuts and as enrollments struggle to recover from the pandemic.

While student debt is an ongoing issue, some borrowers may be able to get relief through student loan forgiveness programs.

Borrowers working toward forgiveness under the Public Service Loan Forgiveness (PSLF) program and on an income-driven repayment (IDR) plan may get their remaining balance forgiven after 120 qualifying payments are made.

Although the Supreme Court blocked a White House effort to forgive up student loans up to $20,000 per borrower, the newly created Saving on a Valuable Education (SAVE) plan will provide relief. Under this income-driven repayment plan, monthly payments for undergraduate student loan borrowers would be set at 5% of discretionary income, unpaid interest would not be capitalized, and those with balances under $12,000 could receive loan forgiveness after 10 years of payments.

How Is Student Loan Interest Calculated?

Federal student loans and most private student loans use a simple interest formula to calculate student loan interest. This formula consists of multiplying your outstanding principal balance by the interest rate factor and multiplying that result by the number of days since you made your last payment.

  • Interest Amount = (Outstanding Principal Balance × Interest Rate Factor) × Number of Days Since Last Payment

The interest rate factor is used to calculate the amount of interest that accrues on your loan. It is determined by dividing your loan’s interest rate by the number of days in the year.

How Are Student Loan Interest Rates Calculated?

Federal student loan interest rates are determined by the 10-year Treasury note auction every May, plus a fixed increase with a cap.

  • Direct unsubsidized loans for undergraduates: 10-year Treasury + 2.05%, capped at 8.25%
  • Direct unsubsidized loans for graduates: 10-year Treasury + 3.60%, capped at 9.50%
  • Direct PLUS loans: 10-year Treasury + 4.60%, capped at 10.50%

Private student loan interest rates are determined by each lender based on market factors and the borrower’s and 肠辞蝉颈驳苍别谤’蝉 creditworthiness. Most private lenders also offer a variable interest rate, which typically fluctuates monthly or quarterly with overnight lending rates such as the Secured Overnight Financing Rate (SOFR).

What Are Current Student Loan Interest Rates?

Federal student loan rates for the year between July 1, 2023, to June 30, 2024, are:

  • Direct subsidized and unsubsidized loans for undergraduates: 5.50%
  • Direct unsubsidized loans for graduates or professional borrowers: 7.05%
  • Direct PLUS loans for parents and graduate or professional students: 8.05%

The Bottom Line

Federal student loan rates are relatively low when compared to historic levels. If you need student loans to pay for a college education, learn what the interest rates are and how they work before applying. Always exhaust all your options for federal student loans first by using the Free Application for Federal Student Aid (FAFSA), then research the best private student loans to fill in any gaps. Whether you choose federal or private loans, only take out what you need and can afford to repay.

If you have student loans and need help paying them, you may want to consider a refinance—but know that this could cause you to lose any protections you receive from having federal loans. If refinancing is right for you, review all of the best student loan refinance companies, which offer competitive rates and can cater to unique debt situations.

Article Sources
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  2. Credible. "Private Student Loans."

  3. U.S. Department of Education, Federal Student Aid. “COVID-19 Emergency Relief and Federal Student Aid.”

  4. LendEDU. “Student Loan Cosigner Survey & Report.”

  5. Inside Higher Ed. “A Tough Year for Community Colleges.”

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  10. Bipartisan Policy Center. "Higher Education Funding Takes a Hit During Recessions. But It Doesn’t Have To."

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