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The federal student loan interest rate will be 6.53% for undergraduate students, up from 5.5% for the current year. The interest rate has not been that high on any undergraduate loans since the ...
The Federal Reserve’s actions can influence student loan interest rates.
Federal student loans. Private student loans. Interest rates. 5.50% to 8.05% for loans disbursed before July 1, 2024. 6.53% to 9.08% fixed for loans disbursed after July 1, 2024. 4.19% to 16.69% fixed
The federal student loan program was criticized for not adjusting interest rates according to factors under students' control, such as the choice of academic major. Critics have contended that flat-rate pricing contributes to inefficiency and misallocation of resources in higher education and lower productivity in the labor market. [ 15 ]
As rates of inflation continue to rise, the Federal Reserve decided to make a bold move Wednesday and increase the federal interest rate by 0.75% points, which is the largest increase in 28 years.
Graphic 1: Total number of dollars (in billions) entering default, 2009-2018, data source: CRS Graphic 2: This graph portrays the changes in the interest rate for direct subsidized loans, 2004-2019. Default and delinquency are increasingly common and are a large risk the government bears when giving out low-interest rate loans.
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