Interest rates on federal student loans for undergraduate and graduate students and parents of undergraduates are rising to highs that haven't been seen in decades for the 2024-2025 academic year. It could potentially frustrate the Biden administration's efforts to make higher education more affordable.
-- Federal direct undergraduate loans will have a 6.53% rate, up from 5.5%
this year and the highest in 16 years, according to student loan expert
Mark Kantrowitz. Direct unsubsidized loans for graduate and professional
students will have a 8.08% rate, up from 7.05%, the highest in 24 years.
-- Direct PLUS Loans for parents of dependent undergraduates and for
graduate and professional students will rise to 9.08% from 8.05%, the
most in 33 years. U.S. student debt has ballooned by 66% over the past
decade, totaling more than $1.77 trillion as of the second quarter in
2023, the Fed said.
-- Federal student loan interest rates are set once a year and are based on
the May Treasury note auction -- when the 10-year Treasury note yield was
4.483% -- plus an add-on percentage. High hopes for a Federal Reserve
rate cut hadn't materialized before next year's rates were set.
-- President Joe Biden, who has campaigned on student debt relief, has
canceled more than $146 billion through a variety of programs, though the
Supreme Court blocked his plan to forgive $430 billion in student loans.
What's Next: The new rates apply to loans starting in July through June 2025 and are fixed for the life of the loan. They don't affect rates of private student loans, which are determined by the type of loan, the credit score of the borrower and their cosigner, and the repayment term.
-- Janet H. Cho
***
Dear Quentin,
I have never had a problem living below my means, until now. My problem is extravagant friends and family members who think differently, post on social media and want me to continue to vacation with them. I have no problem saying no to $16,000 plane tickets, $800 hotel rooms, $22,000 cruises and such, but they keep asking.
When one friend made a fuss over wanting to fly business class, I threatened to cancel completely. I am not poor, but I am a single senior without a rich husband -- or any husband for that matter. I'm helping my grandkids with college and have three properties to maintain. (I have no debt or mortgages.)
I'm weary of repeating myself to these friends. As a result, I often don't answer their calls and I now pretend to be busy when they ask me to go on vacation or to an expensive restaurant. Do we have to live in a world where everything should be displayed on social media? How do I deal with rich friends, and with rising prices?
-- The "Poor" Friend
Read the Moneyist's response here.
-- Quentin Fottrell
***
-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 15, 2024 06:34 ET (10:34 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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