Average Student Loan Interest Rate (2024): Federal vs Private (2024)

FAQs

Average Student Loan Interest Rate (2024): Federal vs Private? ›

Federal student loans currently have interest rates ranging from 6.53 percent to 9.08 percent. Average private student loan interest rates, on the other hand, can range from around 4 percent to about 17 percent. Federal student loan rates are the same for every borrower.

This would mean $5,500 subsidized and $2,000 unsubsidized loans, with a 5.5 percent, 7.05 percent, and 8.05 percent interest rates for the undergraduate loans, graduate loans, and PLUS loans respectively for 2024 graduates and 6.53 percent, 8.08 percent, and 9.08 percent interest rates for undergraduate and Parent PLUS ...

High interest rates for most: Because private loans require a credit check, people with no credit history or a low credit score may end up with a more expensive loan than what the federal government offers — and that's if you qualify for a private loan in the first place.

Students and parents borrowed an estimated $98.2 billion in the 2022-23 academic year. 44% of this was federal unsubsidized loans, 16% was federal subsidized loans, 15% was private or other nonfederal loans, 14% was Grad PLUS loans and 11% was Parent PLUS loans.

That means the widespread expectation is for an initial cut of 0.25 percentage point, or 25 basis points, to benchmark rates, from the current range of 5.25% to 5.5%. With two more policy meetings left later in 2024, the Fed is seen as likely to keep easing policy into the end of the year.

Interest rates on federal student loans recently jumped by one percentage point. Undergraduate loans now carry a rate of 6.53% for the 2024-2025 school year, up from 5.50% last school year. Graduate direct loans have a rate of 8.08%, up from 7.05%.

The Cons of Private Student Loans

Most private student loans do not offer income-driven repayment plans. Private student loans do not qualify for teacher loan forgiveness or public service loan forgiveness. Private student loans have limited options for financial relief when a borrower experiences financial difficulty.

If you signed up for a Sallie Mae loan when you entered college, you might have a high interest rate because you were a college student with no credit history and no full-time income. You may be eligible for a lower interest rate if you have a stable job and a good credit score.

Can you negotiate private student loan interest rates? ›

Yes. But before you begin negotiating, your loans will probably need to be either in default or near default. Some lenders may suggest an alternative repayment plan before entertaining settlement offers.

As in most other types of borrowing, private student loan rates began to trend upward in March 2022 after the Federal Reserve approved its first rate hike in three years. Since then, the Fed has continued to slowly increase rates in an effort to tamp down inflation.

Federal student loans usually have lower, fixed interest rates that stay the same for the duration of the loan. Private student loans can have either fixed rates that stay the same or variable rates that can change over time. It's important to understand the different interest rates and how they will impact your loan.

The total average student loan debt (including private loan debt) may be as high as $40,681. The average federal student loan debt is $37,853 per borrower. Outstanding private student loan debt totals $128.8 billion. The average student borrows over $30,000 to pursue a bachelor's degree.

20% of U.S. adults report having paid off student loan debt. The 5-year annual average student loan debt growth rate is 15%. The average student loan debt growth rate outpaces rising tuition costs by 166.9%. In a single year, 31.5% of undergraduate students accepted federal loans.

The Mortgage Bankers Association predicts in its August Mortgage Finance Forecast that mortgage rates will fall from 6.7% in the third quarter of 2024 to 6.5% by the fourth quarter. The industry group expects rates will fall to 5.9% at the end of 2025 and will continue to average 5.9% in 2026.

All federal student loans for undergraduates currently have an interest rate of 6.53 percent for the 2024-25 school year, while unsubsidized and Direct PLUS loans for graduate students have interest rates of 8.08 percent or 9.08 percent, respectively.

Following the August base rate cut, mortgage rates on fixed rate mortgages have been falling as lenders slashed rates. Many experts are predicting one further base rate cut in 2024 and for interest rates to fall to around 4% by the end of next year.

Earn up to 8.1% FD interest rate: Some banks have revised the interest rates for their fixed deposit (FD) accounts for deposits less than Rs 3 crore, which will be in effect from September 2024. Let's examine the fixed deposit interest rates that apply to both regular customers and senior citizens.