Rapidly rising interest rates are hitting consumers at every turn — and beginning July 1 those borrowing for college will feel more pain, too.
Brace yourself for a significant bump in rates on new federal student loans.
Much of the focus on student loan debt lately has been around the buzz that President Joe Biden might be on the verge of making a move to cancel at least $10,000 in federal student loan debt, which some speculate could apply to borrowers earning less than $150,000 or $300,000 for married couples.
On top of that, millions of student loan borrowers have been able to avoid making payments for nearly 2½ years under pandemic-related relief programs. Unless another extension is in the works, their payments are set to resume in September.
For those still in college, though, higher interest rates that hit this summer can’t be easily overlooked.
The fixed interest rate on federal student loans will climb to 4.99% for undergraduate loans — up from 3.73% last year. The new higher rate applies to Federal Direct Stafford loans for undergraduates issued from July 1 through June 30, 2023.
Rates have nearly doubled in the past two years since the federal fixed rate for undergraduate loans had fallen to 2.75% for the 2020-21 academic year.
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The 4.99% rate brings borrowers close to the 5.04% rate in the…
