What Are The Student Loan Interest Rates Today [2024]

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When it comes to applying for student loans, it is very important to understand what are the student loan interest rates today? If you are looking for the best student loans, then you are in the right place where you will learn all the student loan interest rates today.

Understanding about the current student loan interest rates and ranges for 2024, is very important for every student who is applying for student loans. 

The interest rate for federal undergraduate student loans in the 2023-2024 academic year is 5.50%, up from 4.99% the previous year, marking the highest level since 2008. If you’re considering a new private student loan, fixed-interest rates range from 4.11% to 16.70%, as reported by lending marketplace Credible.

student_loan_interest_rates

Before taking on student loans, it’s crucial to consider key factors, especially given the current unpredictable economic conditions. In June 2023, the Supreme Court blocked a broad debt forgiveness plan proposed by the Biden administration for student loan borrowers. 

In response, two months later, the White House introduced the Saving on a Valuable Education (SAVE) plan, aimed at facilitating loan repayment and eligibility for debt forgiveness.

Furthermore, the COVID-19 moratorium on student loan interest and repayments has ended. Interest began accruing again on September 1, 2023, with the first payments due in October.

What Are The Student Loan Interest Rates Today? 

Here are the key insights of student loan interest rates:

  1. The pause on student loan interest due to COVID-19 ended on September 1, 2023, and payments started up again the following month.
  2. The interest rates for new federal undergraduate loans are at 5.50%, for graduate loans it’s 7.05%, and for parent PLUS loans, it’s 8.05%.
  3. Private student loan interest rates can vary based on the lender and whether the loan has a fixed or variable interest rate.
  4. According to Credible, a student loan marketplace, as of February 2024, fixed rates start at 4.11%, while variable rates start at 4.98%.

What Are the Private Student Loan Interest Rates?

Private lenders establish a range of interest rates. Your specific rate will depend on both your creditworthiness and that of your cosigner.

In the table provided, you’ll find the current rates sourced from the loan marketplace Credible. As of February 2024, annual percentage rates (APRs) on Credible begin at 4.11% for a fixed-rate private student loan. 

These rates represent the offerings from various lenders available on the platform. Each lender will have its own specific range, which might be slightly different.

Sl No.

Loan Type

Fixed APR

Variable APR

1

Undergraduate, and Graduate

4.11% to 15.49%

4.98% to 16.70%

2

Refinance

5.24% to 9.35%

5.52% to 8.70%

When it comes to federal student loans, credit scores and income aren’t considered. However, they’re significant factors for private lenders. 

If students don’t meet the credit requirements set by lenders, they’ll typically need a cosigner. In fact, around 90% of private student loans involve a cosigner.

But don’t worry if you don’t have a stellar credit score or a cosigner. There are lenders out there who provide student loans specifically for those with bad credit, and even loans that don’t require a cosigner.

What Are the Federal Student Loan Interest Rates?

Between July 1, 2023, and June 30, 2024, the interest rates for federal student loans vary depending on the type. For new undergraduate loans, the rate is 5.50%, for new graduate loans it’s 7.05%, and for new parent PLUS loans, it’s 8.05%. These rates are adjusted annually.

Additionally, there’s an origination fee associated with federal direct subsidized and unsubsidized loans, set at 1.057%. 

However, for parent PLUS loans, the origination fee is higher, at 4.228%. This fee is not added to your repayment amount; instead, it’s subtracted from your initial loan disbursement.

What Are the College Enrollment Trends?

There’s been a decline in the number of people signing up for post-secondary education.

In the fall of 2020, colleges and universities reopened their doors after shifting to remote learning due to the pandemic. However, they soon had to backtrack as widespread quarantines forced them to return to virtual classes, leading to the cancellation of sports and other activities.

Despite expectations that community colleges would see increased enrollment during the pandemic, data revealed a different story. While fall enrollment surged for some large public universities, community colleges experienced a significant drop, with some institutions seeing decreases of up to 30%.

By spring 2022, enrollment trends continued to worsen, with total post-secondary enrollment plummeting to around 16.2 million, marking a 4.1% decrease in just one year. 

This followed a 3.5% decline the previous year, primarily driven by a 4.7% drop in undergraduate enrollment compared to the year before the pandemic. The number of undergraduates was down by 9.4% from pre-pandemic levels.

Although enrollment started to level out in fall 2022, combined undergraduate and graduate enrollment remained 5.8% lower than in 2019. By spring 2023, enrollment had dipped another 0.5%.

Why Does the Student Debt Continue to Rise?

After the Great Recession of 2007–2008, state funding for higher education plummeted by a staggering 25%. Consequently, the portion of higher education expenses covered by students surged from 36% in 2008 to 47% in 2012. 

This shift contributed to the ballooning of student loan debt, which has now surpassed $1.6 trillion. The situation might worsen if the education system faces further budget cuts and struggles to rebound from the impact of the pandemic on enrollments.

Although student debt remains a pressing concern, some borrowers might find relief through student loan forgiveness programs.

Borrowers working towards forgiveness through programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans could have their remaining balance forgiven after making 120 qualifying payments.

How is Student Loan Interest Calculated?

When it comes to federal student loans and the majority of private student loans, they both use a simple interest formula to calculate the interest on your loan. This formula involves multiplying your remaining loan balance by the interest rate factor, and then multiplying that result by the number of days since your last payment.

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

The interest rate factor is what determines how much interest builds up on your loan. It’s figured out by dividing your loan’s interest rate by the number of days in a year.

How Are Student Loan Interest Rates Calculated?

Federal student loan interest rates are set through the 10-year Treasury note auction held every May, along with a fixed increase capped at a certain level.

Here’s how it breaks down:

  1. For direct unsubsidized loans taken out by undergraduates, it’s the 10-year Treasury rate plus 2.05%, with a cap at 8.25%.
  2. For direct unsubsidized loans for graduate students, it’s the 10-year Treasury rate plus 3.60%, capped at 9.50%.
  3. And for Direct PLUS loans, it’s the 10-year Treasury rate plus 4.60%, with a cap at 10.50%.

On the other hand, private student loan interest rates vary from lender to lender and are influenced by market conditions as well as the creditworthiness of both the borrower and any cosigners. Many private lenders also offer variable interest rates, which can change monthly or quarterly based on rates like the Secured Overnight Financing Rate (SOFR).

What Are Current Student Loan Interest Rates?

Here are the federal student loan rates for the period between July 1, 2023, and June 30, 2024:

  1. If you’re an undergraduate and have direct subsidized or unsubsidized loans, your rate is 5.50%.
  2. For graduate or professional students with direct unsubsidized loans, the rate is 7.05%.
  3. Parents or graduate/professional students with direct PLUS loans have a rate of 8.05%.

Final Thoughts

Federal student loan rates are currently quite low compared to historical levels. If you’re considering taking out student loans to cover college expenses, it’s crucial to understand how interest rates work before you apply. 

Start by exploring all your options for federal student loans through the Free Application for Federal Student Aid (FAFSA)

Then, if needed, look into private student loans to fill any remaining gaps. Whether you opt for federal or private loans, only borrow what you truly need and what you’ll be able to repay comfortably.

If you’re struggling to manage your student loan payments, refinancing might be an option to consider. However, keep in mind that refinancing could mean losing certain protections provided by federal loans. 

If you decide refinancing is the right choice for you, take the time to research the best student loan refinance companies. Look for ones offering competitive rates and tailored solutions to your specific debt situation.

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