Student Loans Will Become More Expensive — Here Are The New Rates
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Student loans will become more expensive this year. Here are the new rates.

Here’s what you need to know — and what it means for your student loans.

Student Loans

Bad news for student loan borrowers: student loan interest rates on federal student loans are rising significantly this upcoming academic year starting July 1, 2022. Here are the new student loan interest rates:

Undergraduate Student Loans (Subsidized and Unsubsidized)

  • New Rate: 4.99%
  • Current Rate: 3.73%

Graduate Student Loans (Unsubsidized)

  • New Rate: 6.54%
  • Current Rate: 5.28%

Parent PLUS Loans and Grad PLUS Loans (PLUS Loans)

  • New Rate: 7.54%
  • Current Rate: 6.28%

Student Loans: Q&A

Why are student loans getting more expensive?

Each May, Congress sets federal student loan interest rates for the upcoming school year based on an auction of 10-Year Treasury notes. The Federal Reserve has raised interest rates this year to help control inflation. The increase in interest rates has caused consumer debt to become more expensive.

When will these student loan interest rates become effective?

These new interest rates are effective July 1, 2022 through June 30, 2023.

Which student loans does this affect?

The new interest rates apply to federal undergraduate student loans (both subsidized and unsubsidized), graduate student loans (unsubsidized), and Direct PLUS Loans (including Parent PLUS Loans and PLUS Loans for graduate or professional degrees) borrowed after July 1, 2022.

How much will student loan interest rates increase?

Student loan interest rates will increase by 1.26% percentage points. On a percentage basis, however, this interest rate increase is substantial:

Undergraduate student loans: 33.8%

Graduate student loans: 23.9%

Direct PLUS Loans: 20.1%

Does this increase affect my student loans?

If you have existing federal student loans, there will be no impact to your interest rate. This is because federal student loans have a fixed interest rate that will not change over the life of your student loan. However, if you borrow new federal student loans after July 1, 2022, then your new federal student loans will have a higher interest rate.

Do these new interest rates affect my private student loans?

No, these new student loan interest rates only apply to federal student loans. The federal government determines interest rates for federal student loans. In contrast, private lenders determine interest rates for private loans. While federal student loans have fixed interest rates, private loans may have either a fixed or variable interest rate. You should check with your lender to determine if your private loans will have a higher interest rate.

Are these new interest rates on student loans fixed or variable?

These new interest rates are fixed interest rates. Why? All federal student loans have fixed interest rates, which means your interest rate on your federal student loan will never change regardless of what happens to underlying interest rates.

Can I borrow student loans now to get a lower interest rate?

You can’t borrow new federal student loans for the upcoming school year before July 1, 2022. Unfortunately, you won’t be able to to get a lower interest rate on a new federal student loan before then.

How to lower the interest rate on your student loans

Student loan refinancing is the best way to lower the interest rate on your student loans. Refinancing can help you save money, pay off student loans faster, and get out of debt. You can refinance private or federal student loans, or both.

This student loan refinancing calculator shows you how much money you can save through student loan refinancing.

When you refinance student loans, you get a new student loan with a lower interest rate and one monthly payment. Choose a fixed or variable interest rate as well as a student loan repayment term from 5 to 20 years.

To refinance your student loans, you’ll need a credit score of at least 650, be employed or have a job offer, have stable monthly income, and have monthly cash flow to pay your student loans and other living expenses. If you need income-driven repayment plans, are pursuing public service loan forgiveness (or similar federal beenfits or programs), then refinancing federal student loans is not recommended (but you should refinance your private loans). If you don’t meet the requirements for refinancing, you can apply with a qualified cosigner who can help you get approved and get a lower interest rate. Some lenders will release the cosigner after you’re approved and meet certain requirements.

Student Loans: Related Reading

Bill Maher: Student loan forgiveness is a “loser” issue

Biden confirms he won’t cancel $50,000 of student loans—5 key takeaways

Student loan forgiveness: 5 key takeaways from major announcement

Student loan forgiveness: who could qualify under Biden’s plan

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