Interest rates for federal student loans have inched up for the second time in as many years. The rate on undergraduate Stafford loans disbursed on July 1, 2018, or later is 5.05%, up from 4.45% last year. On Stafford loans for graduate and professional students, the rate is now 6.6%. And the rate on PLUS loans (which allow you to borrow up to the total cost of education, minus any financial aid) for graduates and parents is now 7.6%.
The higher rates won’t affect existing loans, but new borrowers will pay more interest over the life of the loan. For example, an undergraduate student who borrows $7,500 in new Stafford loans will pay about $2 more per month, or about $265 more over a standard 10-year repayment period.
The Federal Reserve is expected to continue to raise interest rates, so it’s more important than ever to reduce the amount you need to borrow. Make sure you’ve tapped all scholarships and grants you’re eligible for, along with savings, before taking out loans. Avoid private loans, which typically charge higher interest and don’t offer the same protections as federal debt. After graduation, sign up for automatic payments, which will cut your interest rate by 0.25 percentage point.
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.
-
The $33,000 Retirement: One Man's Surprising Path to Financial Freedom at 61Forget what society tells you, even with less than $1 million, you can be happy in retirement.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
Roth IRA Contribution Limits for 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnbreal estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute VacationTravel 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 DealsAmazon 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 Stepsinsurance 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 RateBecoming a Homeowner Mortgage rates are high this year, but you can still find an affordable loan with these tips.
