The total student debt in the United States is now over 1.4 trillion dollars, and it keeps increasing. Starting in July, interest rates will rise on new federal loans for 2017-2018. College students can expect to pay even more money as they borrow for school next year.
According to CNBC, rates were set based on the Treasury Department’s May 10 auction of 10-year notes. For all new loans disbursed as of July 1, 2017 and up to June 30,2018, students will have to pay 4.45 percent which is an increase from this year’s 3.76 percent.
Sadly, graduate students can also expect to pay higher financing costs after July 1.
They will have to pay 6 percent for a direct unsubsidized loan, which begins accruing interest as soon as the borrower takes out the loan. That’s an increase from 5.31 percent this year.
Finally, rates on direct PLUS loans, which both graduate students and parents of undergrads can use, will rise to 7 percent from last year’s 6.31 percent.
With the rate increase, a student who borrows the same amount next academic year at 4.45 percent can expect to pay almost $1,000 more in interest.
These increases don’t apply to private student loans.
“This increase doesn’t affect existing loans, just the ones that are disbursed starting July 1,” said Mark Kantrowitz, vice president of strategy for college and scholarship search site Cappex.com. So if you’ve already taken out a loan, don’t worry! This only applies to people who take out a loan starting July 1.