Student Loan Interest Rates Increasing
Career College Central summary:
Interest rates go up today for students taking out new federal loans. This hike is relatively minimal but could foreshadow more increases to come. The change stems from a high-profile, bipartisan deal brokered last year by Congress and signed by President Barack Obama that ties the rates to the financial markets.
Interest rates go from 3.86 percent to 4.66 percent on undergraduate Stafford loans. Graduate student loans go from 5.41 percent to 6.21 percent. Interest rates on Plus loans for parents go from 6.41 percent to 7.21 percent. For every $10,000 borrowed, the average borrower under the hike will pay back about $4 more every month when they begin paying back the money—about the price of a fancy latte.
If the economy continues to improve, however, these kinds of rate hikes could continue. Congress stipulated that the rates for new loans be reset annually but that borrowers keep the rate they were given for the life of the loan. The compromise in Congress was reached after rates doubled last July.
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