The interest rate on many new federal student loans is set to rise to its highest level in more than a decade next year as lenders throughout the economy seek higher returns for borrowing money. <\/p>\n
On Tuesday, the U.S. Department of Education said in a notice on its website that the rate for undergrads would rise to 6.53% from 5.5%. That\u2019s equivalent to $113.72 for every $10,000 borrowed, according to Mark Kantrowitz, an expert on student loans, versus $108.52 for this past year. <\/p>\n
For graduate students, the rate is rising from 7.05% to 8.08%, or to $121.77 per $10,000 from $116.36.<\/p>\n
The rate levels are set by a pre-determined formula that takes the current yield on 10-year Treasury notes and adds percentage points based on the loan type and loan recipient.<\/p>\n
The interest rate on the most recent auction of 10-year notes hit 4.483%. The 10-year is considered a benchmark rate and reflects investor appetite for risk given current circumstances in the economy. <\/p>\n
Right now, the biggest factor in the economy remains inflation, and lenders are looking for higher rates to offset its effects. <\/p>\n
It is not clear whether the Biden administration could intervene to freeze or even reduce rates from current levels. In 2013, the Obama administration signed a bipartisan bill to retroactively lower rates. Biden has made reducing the burden of student loans a cornerstone of his agenda and has rolled out a new debt cancellation plan after the Supreme Court rejected an earlier one. <\/p>\n
A spokesperson for the Biden administration did not immediately respond to a request for comment. <\/p>\n
The new rates do not affect outstanding student loans or private student loans, which tend to have much higher interest rates. <\/p>\n<\/p>\n
The interest rate on many new federal student loans is set to rise to its highest level in more than a decade next year as lenders throughout the economy seek higher returns for borrowing money. On Tuesday, the U.S. Department of Education said in a notice on its website that the rate for undergrads would […]<\/p>\n","protected":false},"author":0,"featured_media":4395,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4394","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4394"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4394\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4395"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}