Federal Student Loan Rates to Surge, Reaching 16-Year High

Set against a backdrop of persistent inflation and Federal Reserve policies, the upcoming academic year will see significant hikes in student loan interest rates.

• Interest rates for federal undergraduate student loans are projected to rise to 6.5% for the 2024-2025 academic year, marking the highest rate since 2008.
• The increase is tied to the yield on 10-year Treasury bonds, which closely follows the Federal Reserve's benchmark interest rate.
• Experts warn the higher rates will substantially increase the financial burden on students, with total interest payments rising significantly over the loan's term.
• The rate hike reflects ongoing inflationary pressures and Federal Reserve efforts to stabilize the economy through high interest rates.
• Applications for federal student loans have dropped as potential borrowers react to rising education costs and increased borrowing rates.

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