Student Loan Rates Inch Up
But don’t panic. The increase won’t dent your budget much.

First, the bad news: Federal student loans are more expensive this year. Undergraduate Stafford loans disbursed after July 1, 2014, carry a 4.66% interest rate, up from 3.86%. Rates on Staffords for graduate and professional students are now 6.21%, and PLUS loans for graduates and parents now charge 7.21%. But there’s good news: The hikes are manageable.
Valerie Cathcart, a rising senior at Marymount Manhattan College, in New York City, isn’t too worried. She borrowed $6,500 in unsubsidized Stafford loans last year (the loans accrue interest while students are still in school) and plans to take out $7,500 (the maximum for dependent undergraduate third years and above) this year. But the higher rate will add only about $3 per month to a $7,500 loan, or about $345 over a standard ten-year repayment period. And last year’s debt will remain at the old rate of 3.86%—no retroactive rate change there. “I’m just happy that it’s happening my last year of college,” says Cathcart.
Borrowers can’t dodge higher rates, but they can borrow wisely. Reduce the need for loans by tapping savings, working part-time and cutting your cost of living. After graduation, sign up for automatic debits to repay your loans, which will cut your interest rate by 0.25 percentage point. Avoid private loans. Their rates are typically variable, and the loans don’t offer the same protections as federal debt.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Susannah Snider worked as a research-reporter and staff writer at Kiplinger Personal Finance Magazine. She went on to serve as managing editor for money at U.S. News, overseeing articles and content covering real estate, personal finance and careers. She is a certified financial planner professional and earned her CFP marks in 2019.
-
Why Homeowners Should Beware of Tangled Titles
If you're planning to pass down property to your heirs, a 'tangled title' can complicate things. The good news is it can be avoided. Here's how.
-
A Cautionary Tale: Why Older Adults Should Think Twice About Being Landlords
Becoming a landlord late in life can be a risky venture because of potential health issues, cognitive challenges and susceptibility to financial exploitation.
-
Roth IRA Contribution Limits for 2025
Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
-
How Much Life Insurance Do You Need?
insurance When assessing how much life insurance you need, take a systematic approach instead of relying on rules of thumb.
-
When Is Amazon Prime Day? Everything We Know So Far, Plus Early Deals
Amazon Prime Here are the key Amazon Prime Day dates and details you need to know, plus some of our favorite early deals to shop ahead of the sale.
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
-
Five Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Mortgage rates are high this year, but you can still find an affordable loan with these tips.
-
Retirees, It's Not Too Late to Buy Life Insurance
life insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.