Student Loan Costs Will Rise 18% This Summer

College and graduate school are about to get more expensive.

Here’s what you need to know.

Undergraduate Student Loans

Interest rates for federal undergraduate Student Loan Costs will rise from 3.76% to 4.45% – an increase of 0.69 percentage points, or 18.4% – starting July 1.

Graduate Student Loans

Graduate students will also pay more for school. The cost for a federal direct unsubsidized graduate student loan will rise from 5.31% to 6.00% – a 13% increase.

PLUS Loans

PLUS Loans, which both graduate students and parents of undergraduate students can use, will rise from 6.31% to 7.00% – a 10.9% increase.

The Financial Impact

Each year, Congress sets the fixed interest rates for federal student loans. This rate is based on the May 10 auction of U.S. Treasury notes, and applies only to federal student loans disbursed from July 1, 2017 – June 30, 2018.

The changes do not apply to private student loans, which are student loans not issued by the federal government. If you have a federal student loan issued prior to July 1, 2017, these changes do not impact your student loans.

While the relative percentage increases may seem substantial, the absolute financial impact is less severe.

For example, a college student who borrows $10,000 before July 1 would owe $12,013 under a standard 10-year repayment plan and current 3.76% interest rate. Under the new 4.45% interest rate, a college student who borrows $10,000 after July 1 would owe $12,408.

The difference is only $395 over 10 years, which equates to a few extra dollars per month in interest.

According to Make Lemonade, there are over 44 million student loan borrowers who collectively owe $1.4 trillion in student loan debt. Today, student loan debt is the second highest consumer debt category in the U.S. – second only to mortgage debt.


Best Private Student Loans For 2018

Lender
Rates (APR)
Loan Type
4.63% - 9.71%
Graduate, Undergraduate

Overview

Variable Rates:4.63% - 9.71%
Fixed Rates:5.36% - 9.69%
Minimum Loan Amount:$5,000
Loan Terms:10
Origination Fees:No
Prepayment Fees:No
Co-signer Option:Yes

Details

  • Low rates from community lenders like credit unions and community banks
  • Get lower rates with a co-signer
  • Ability to pause payments for up to 18 months if you become unemployed
  • May consider your academic credentials to help you get a lower rate
  • If you repay 10% of your loan before your loan enters full repayment period, 1.0% APR is dropped from your current interest rate
3.95% - 12.10%
Cosigned Graduate, Undergraduate

Overview

Variable Rates:3.95% - 10.45%
Fixed Rates:5.79% - 12.10%
Minimum Loan Amount:$2,000
Loan Terms:5, 10, 15 years
Origination Fees:No
Prepayment Fees:No
Co-signer Option:Yes

Details

  • Ability to start repaying loan while in school
  • Co-signer release after 24 consecutive payments
  • Financial hardship forbearance option
  • Non-U.S. citizens are eligible if they have a creditworthy co-signer who is a U.S. citizen or permanent resident
  • 1% Cash Back Reward to students on their loan principle amount upon graduation
5.38% - 13.74%
Non-cosigned Graduate, Undergraduate

Overview

Variable Rates:5.38% - 12.68%
Fixed Rates:7.07% - 13.74%
Minimum Loan Amount:$2,000
Loan Terms:5, 10, 15 years
Origination Fees:No
Prepayment Fees:No
Co-signer Option:Yes

Details

  • Borrowers can qualify without a cosigner
  • A borrower’s major, graduation date and future earnings potential are considered
  • Borrowers who choose a fixed-rate option only can select a 10 year term
  • No minimum credit score or minimum income is required
  • Must have Satisfactory Academic Performance of 2.5 GPA, have Junior status or higher, and must be enrolled full-time
  • 1% Cash Back Reward to students on their loan principle amount upon graduation
3.54% - 12.07%
Graduate, Undergraduate

Overview

Variable Rates:3.54% - 10.81%
Fixed Rates:5.31% - 12.07%
Minimum Loan Amount:$2,000
Loan Terms:8, 10, 12, 15 years
Origination Fees:No
Prepayment Fees:No
Co-signer Option:No

Details

  • Student loans available to graduate, bachelors and associates degrees
  • Deferment and forbearance options may be available
  • Grace period for undergraduates: 6 months
  • Grace period for graduate students: 9 months
  • Flexible student loan repayment options

Overview

Variable Rates:5.38% - 5.62%
Fixed Rates:6.24% - 6.66%
Minimum Loan Amount:$5,000
Loan Terms:10, 15, 20 years
Origination Fees:No
Prepayment Fees:No
Co-signer Option:Yes

Details

  • Available at a select number of top business schools
  • Opportunity for 0.25% rate discount on fixed rate student loans upon proof of employment
  • Forbearance up to 1 year available
3.62% - 12.98%
Undergraduate, Graduate

Overview

Variable Rates:3.62% - 12.98%
Fixed Rates:5.74% - 12.87%
Minimum Loan Amount:None
Loan Terms:None
Origination Fees:No
Prepayment Fees:No
Co-signer Option:Yes

Details

  • Multiple repayment options
  • You may be able to increase your chance of approval if you apply with a credit worthy co-signer
  • Borrow up to 100% of the school-certified cost of attendance
  • Choose up to 120 tutoring minutes with Sallie Mae’s partner Chegg
  • Deferment and forbearance options available

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