Federal Student Loan Interest Rates Decrease for New Borrowers In 2019 – 2020

For the first time in three years, the interest rates on Federal student loans will decrease anywhere from seven to ten percent depending on the loan type. This will take effect for new Federal student loan borrowers after July 1, 2019. The interest rate for Federal Direct Loans disbursed on or after July 1 will decrease from 5.045% to 4.529% for undergraduate Direct Loans, from 6.595% to 6.079% for graduate/professional Direct Unsubsidized Loans, and from 7.595% to 7.079% for Parent and Grad PLUS loans. The interest rate caps for these loans are 8.25%, 9.5%, and 10.5%, respectively. FYI — interest rates on student loans are tied to the government’s cost to borrow. The May Treasury auction serves as the benchmark for rates for the following year. Whatever interest rate is set for the 10-year note is used as the baseline interest rate for student loans. Click here for full article on forbes.com