Thursday, May 8, 2014
Soon to be on the Up and Up
The cost of borrowing money from the federal government to pay for college will increase in the coming academic year. Interest rates on most federal student loans are now set to rise following Wednesday’s sale of 10-year Treasury notes, the government debt to which rates are tied.
The interest rate on new loans for undergraduate students will increase to 4.66 percent, up from the current 3.86 percent. The cost of new direct loans for graduate students will jump to 6.21 percent from the current 5.41 percent.
A bipartisan accord struck in Congress last year pegged the interest rates on federal student loans to the government’s borrowing cost. The government now sets student loan interest rates each year based on the last auction of Treasury 10-year notes prior to June 1.