As of 2018, the average student loan interest rate for undergraduate students is 3.76%. The interest rates for graduate students are as high as 6.84%! If you’re a recent college graduate, this might be encouraging news–or terrifying news, depending on how you feel about your debt.
Student Loan Debt
As of July 1, 2018, the interest rates for student loans were set at an average of 4.45%. This is the lowest average rate in history and a record low. The interest rates for undergraduate federal loans were set at 4.45% for the 2019-2020 school year.
The interest rates for student loans are about to change in 2018. Interest rates will be tied to the US prime rate.
How to Calculate Your Student Loan Interest Rate
To calculate your loan interest rate, you must:
1. You must have a Federal Direct Stafford Loan or a Federal Direct PLUS Loan.
2. Find the monthly payments for the loan by doing a search for “Federal Student Aid Repayment Estimator” on the Department of Education website
3. To find the interest rate per year, divide the monthly payment by 12 (for example, if your monthly payment is $191 and there are 12 months in a year, that would be an interest rate of about 7.74%).
Interest rates are used to show the cost of lending money and help determine the price of loans. Interest rates can vary by loan type, specific loan duration, and the lender. Interest rates exist across the US and can be seen on the Federal Reserve website.
The process for calculating your interest rate is as follows:
(1) – (2) =
-10000/(1+i) = i
In this case: i=0.0625
How the New Rates Affect You
The average federal student loan rate increased from 3.76% to 5.31%, and the rates for private loans were upped from 8.25% to 9.52%.
The Federal Reserve has raised the interest rates for student loans, which will affect borrowers in 2018. On average, students now have to pay back an additional $1,000 in loan interest each year on a standard 10-year repayment plan for federal loans alone – and these changes may be permanent if Congress doesn’t act.
As of July 1st, new law requires students to refinance loans using a federal program known as the income-driven repayment (IDR) plan. However, the improvement of this bill also meant that it would raise student loan interest rates from 3.4 percent to 6.7 percent. The new law applies to all undergraduate and graduate loans that are not older than 15 years because many people have already paid off their loans.
What are the Options for Refinancing Your Loan?
In the current economic climate, it’s never been more important to save money possible. One way to save money on interest rates is by refinancing your student loans. Interest rates have increased in recent years but there are still ways to lower your rate and save a lot of money.
Interest rates for student loans have been climbing, but there are still opportunities to refinance a loan. These opportunities are based on your situation, so it’s important that you talk to a financial advisor.
The interest rates on student loans are changing. The interest rate for Stafford loans will increase to 4.7 percent. These high rates are increasing the cost of higher education, but there are ways that you can reduce the cost of your loan by refinancing your student loans at a lower interest rate.
The interest rates for federally-backed student loans could be as high as 6.6% in 2018. Tuition costs continue to rise and many students are coming back to school with debt that will take years to repay.