Student Loan “Interest Rates”

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Current student loan interest rates and ranges for May 2022

The current student loan Interest Rates are some of the most affordable in history. While the rates may seem attractive, there are still things you should consider before taking on student loan debt in this unstable economic environment.

School Enrollment Trends

Colleges and universities opened dorms and classrooms again in fall 2020. There were some unexpected and expected trends that followed. Many schools delayed sports and reported widespread quarantines within the first week of classes being resumed.

The trends in enrollment were less expected. Many believed that community colleges would see higher enrollment due to the pandemic. However, early data showed that enrollment in fall was up at some large public universities while it was down at many community colleges that serve low-income students.

Students continue to have higher student debt

Our society continues to suffer from student debt. Federal funding for public universities has declined by 22% since the 2007-2008 Great Recession. Tuition costs have increased 27%. The result is that student loan debt has exceeded $1. trillion. If the education system is subject to more budget cuts, and more Americans are unable to find work, the debt could get worse.

Private lenders can set interest rates. The creditworthiness of both you and your cosigner will determine the rate. According to Bankrate, the annual percentage rates for private student personal loan (APRs), are currently:4

How is student loan interest calculated?

The simple interest formula used to calculate student loan interest for federal student loans and private student loans is the same as that used by most private student loans. The formula involves multiplying the outstanding principal balance by interest rate factor, and multiplying this result by the number days since your last payment.

Interest Amount = (Outstanding principal balance x Interest Rate Factor) * Number of days since last payment

To calculate the interest you pay on your loan, the interest rate factor is used. This is calculated by subtracting the interest rate on your loan from the number of days in a year.

offer competitive rates and can accommodate unique debt situations.

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How are student loan interest rates calculated?

Federal student loan interest rates are determined by the 10-year Treasury Note auction each May. There is also a fixed increase with an upper limit.

Direct unsubsidized loans to undergraduates: 10-year Treasury + 2.5%; capped at 8.%

Graduates can get direct unsubsidized business loan: 10-year Treasury + 3.%; capped at 9.%

Direct PLUS loans: 10-year Treasury + 4.%; capped at 10.%5

Lenders determine private student loan interest rates based on market factors as well as the creditworthiness of cosigners and borrowers. Private lenders often offer variable interest rates, which fluctuate monthly or quarterly. Overnight lending rates like the Secured Overnight Finance Rate (SOFR) are also available.

Federal student loans do not take into consideration income and credit scores, but these factors are important in the decisions of private lenders. A cosigner is required for students who do not meet the credit requirements of lenders. According to the 2017 Annual Report of Consumer Financial Protection Bureau (CFPB), more than 90% of private student loans were secured by a cosigner. Even if you don’t have a cosigner or a high credit score, lenders can offer student loans with bad credit and student loans that do not require a cosigner.

What are the current student loan interest rates?

In 2020, the 10-year Treasury rate fell to record levels. Federal student loan rates starting July 1, 2021 are among the lowest in recent history.

Direct, subsidized and unsubsidized student loans: 3.3%

5.8% Direct unsubsidized loans to graduates and professional borrowers

Direct PLUS loans to parents, graduate and professional students 6.8%1

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Do You Need a Student Loan?

Federal student loan rates are at an all-time low, making this the perfect time to get a loan. Make sure you exhaust all options for federal student loan assistance first. The Free Application for Federal Student Aid form (FAFSA), allows you to submit your information and then search for the best private student improvement loans. You should only borrow what you really need and are able to repay, regardless of whether you take out federal or private loans.

Refinance is a good option if you have student loans. The best student loan refinance firms

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