Education didn’t officially announce the new student loan interest rates, but Mr. Kantrowitz calculated them using the government’s formula, which adds an additional fixed rate depending on the type of loan.
The interest rate on direct loans for PhD students will increase from 4.3 percent to 5.28 percent. The interest rate on PLUS loans, additional loans for parents and PhD students, will increase from 5.3 percent to 6.28 percent.
The new rates do not apply to private student loans.
Here are some student loan questions and answers:
Can I borrow now for the next year to get lower interest rates?
No. New federal student loan interest rates are set for each academic year beginning July 1, according to a formula established by Congress. The loans are offered through colleges based on information you report on the Free State Student Aid Application (FAFSA).
The increase does not affect the interest rates on student loans already borrowed. Once the loan rates are set, they are set for the life of the loan.
How much can i borrow?
The amount of money that students can borrow annually and in total for federal loans is limited. Generally, dependent students can borrow up to $ 5,500 in the first year and up to $ 6,500 in the second year. For the third and fourth years, the limit is $ 7,500. The total cap is $ 31,000 – higher than the combined annual limits if a student takes more than four years to graduate. The limit values are higher for independent students and PhD students.
When does the current break in student loan payments end?
In March 2020, as part of the government’s pandemic relief program, Congress allowed most federal student loan borrowers to temporarily suspend monthly payments and set the interest rate on the loans to zero during the suspension. The suspension has been extended several times, most recently in early 2021 when the Biden government extended it until at least September 30th. Some borrower advocates support another extension, but it is uncertain whether that will happen.