Student-Loan Interest Rates Set to Reach Great Recession Highs
- Interest on federal loans track 10-year Treasury yields
- May 8 Treasury auction determines rate for next academic year
Loans taken out by undergraduates for the 2024-2025 school year would have a rate of 6.61%, the highest since 2008.
Photographer: Dee Dwyer/BloombergAnyone who needs to borrow from the US government to cover college tuition this fall will likely face the highest borrowing costs for student loans in more than 15 years.
That’s because interest rates on federal student debt are determined each academic year by a formula taking the yield from May’s US Treasury 10-year note auction and adding 2.05%. Yields have soared in recent weeks as Federal Reserve officials reconsidered the timing of their first interest-rate cut in light of the lack of progress on inflation.