Student Loan Rates Expected to Rise

Student Loan Rates Expected to Rise


Brace yourself, student loan rates could be on the rise. Unfortunately, higher rates will result in higher monthly payments after graduation. Consumer Financial Protection Bureau Student Loan Ombudsman Rohit Chopra recently published a report on the matter.

How much are interest rates expected to rise? Well, the CFPB expects federal loans interest rates to rise 1.23 percentage points for loans taken out between July 2014 and June 2015.

Federal loan interest rates are tied to the 10-year Treasury note. A bond auction next month will determine the federal student loan interest rates.

Says Chopra in a statement, “…Many students end up borrowing more than $5,000 for their education. For instance, graduate students borrowed an average of approximately $18,600 in PLUS Loans per year, according to the National Center for Education Statistics. With interest rates set to go up, many graduate students who borrow after July will pay an additional $1,400 over ten years of repayment for each year they are in school, compared to this year’s rate.”

The CFPB says it has updated its Paying for College tool so that students and parents can more accurately estimate monthly payments after graduation.