- The U.S. Department of Education sets annual interest rates on federal student loans once a year.
- The percentage is based on the 10-year Treasury note, which has been on the rise while the Federal Reserve has kept interest rates high until inflation comes down.
- Federal student loan rates may rise by about 1 percentage point in the 2024-2025 academic year, according to one estimate.
As a result, federal student loan rates may increase in the 2024-2025 academic year, according to an estimate by higher education expert Mark Kantrowitz. The rate could go up by 1 percentage point.
“This is a fairly big jump,” Kantrowitz said.
Here’s what borrowers need to know.
What will the new rates be?
Who is affected?
All federal education loans issued on or after July 1, 2024, will be subject to the new rates.
Sorry, families: You can’t try to evade the rate increase by borrowing ahead of that deadline. Loans for the 2024-25 academic year must be taken out after July 1.
Don’t worry about loans you’ve taken out for previous academic years: Most federal student loan rates are fixed, meaning the rates on those existing loans won’t change.
The rate changes apply only to federal student loans. Private loans come with their own — often higher — interest rates.
