Education Dept. announces highest federal student loan interest rate in more than a decade

The U.S. Department of Education announced Tuesday the interest rates on federal student loans for the 2024-2025 academic year.

The interest rate on federal direct undergraduate loans will be 6.53%. That’s the highest rate in at least a decade, according to higher education expert Mark Kantrowitz. The undergraduate rate for the 2023-2024 year is 5.5%.

For graduate students, loans will come with an 8.08% interest rate, compared with the current 7.05%. Plus loans for graduate students and parents will have a 9.08% interest rate, an increase from 8.05% now. Both of those rates haven’t been as high in more than 20 years, Kantrowitz said.

The rise in interest rates could complicate the Biden administration’s efforts to get the student loan crisis under control and relieve borrowers of the pain of interest accrual, experts say. Even as millions of people have benefited from recent debt relief measures, new students will be saddled with more expensive loans for decades to come.

EffortPostMcGee,

I just graduated and most of the people I was going to school with agreed that, regardless of if we pay these loans or not, the crisis is so bad that they’ll have to forgive us all eventually anyway. So the only people even entertaining the idea of paying these things off are people with internships to ghoulish corporations or non-profits. Otherwise, we are all just acting like they simply ✨ do not exist ✨

applepie,

Why would the people who own everything ever do that?

Literally, they created a large decently educated peasant class to exploit haha loaded you up with debt that you can't pay off or BK.

Y'all need to wake up and understand where you live lol

Mokey,
@Mokey@hexbear.net avatar

As someone who paid off their student debt, student debt should be illegal and everyone who is in complicit in its existance should be lined up and shot no questions asked

applepie,

Yeah but have you thought about the bargain position of the job owners?

CDommunist,
@CDommunist@hexbear.net avatar

brandon Listen Jack, the economy is so good it wont hurt anyone to pay a little extra

RION,
@RION@hexbear.net avatar

I don’t relish coming to Brandon’s defense but this doesn’t matter as much as it might seem. Everyone taking these loans (except parents taking out for their kids, maybe?) will be eligible for the SAVE plan where any interest remaining after making your monthly payment will be wiped out. It doesn’t matter if it’s at 6.5% or 100%, your debt will not grow because of interest.

Of course it matters in that it can extend the amount of payments you have to make to pay off your loans (like if only $37 is going towards principal instead of $40) but for most cases where the principal is large enough for the interest to be particularly impactful, you’ll be shooting for the blanket forgiveness after 20 years of payments rather than paying it off regularly.

homhom9000,
@homhom9000@hexbear.net avatar

But under the terms of the save plan, it looks like it only covers the remaining of interest if the payment isn’t enough. So wouldn’t that make the principle unchanging if the payment wasn’t enough to cover interest at all? Just paying the “interest” every month.

RION,
@RION@hexbear.net avatar

Correct, which steers you toward the 20 year forgiveness path through minimum payments (or as little as 10 years depending on how much you borrowed). If so little of your payment was going to the principal that a 1% rate hike means it’s all going to interest, the forgiveness path was probably the best choice for you to begin with.

homhom9000,
@homhom9000@hexbear.net avatar

Such a roundabout way to “forgive”.

Adkml,

But Biden is canceling student debt for another 4327 people, somehow none of which are still anybody I know.

KoboldKomrade,

6.5% is (edit) nearly higher then mortgages. (Looks like Mortgages are about 6.5-7% right now. lol) Might be cheaper to become a landlord then to go to school. Really pushing the downfall of society with this one.

Nearly 10% is getting into loan shark territory.

came_apart_at_Kmart,

it’s absolutely cheaper to be a landlord.

the barrier is having a pile of cash or some asset worth a pile of cash. if you have a pile of cash and you are current on any debts / have a co-signer, you can borrow against your existing assets to buy more property and collect rents to cover your payments/interest, cost of maintenance, and a personal income for yourself.

even if you don’t want to handle any of the lease signing, tenant issues, maintenance hiring, etc, you can hire a “property management” company and pay them 10% of the rent collected to handle all of it. large/significant improvements would have to be financed by you, but if it’s a livable structure that meets code, you can just sit back and do nothing while taking in 90% of the rent.

additionally, in our ongoing housing crisis / property hoarding situation, even though you haven’t paid off the loan to buy the residence, it’s net worth will grow beyond the original purchase price and let you access more credit to purchase another property.

applepie,

Where are you getting these under 7 motagge?

50% down and 900 fico?

Infamousblt,
@Infamousblt@hexbear.net avatar

Nice job Biden you solved the student loan crisis!

SacredExcrement,

From “No student debt” to “highest interest rates on student loans in over a decade”

This motherfucker is trying to lose, you can’t convince me otherwise

TheLepidopterists,
@TheLepidopterists@hexbear.net avatar

The rise in interest rates could complicate the Biden administration’s efforts to get the student loan crisis under control and relieve borrowers of the pain of interest accrual, experts say.

He’s the one DOING this! What do you mean his “efforts to get the student loan crisis under control” he’s actively making it worse. Big “Biden isn’t doing enough to restrain Netanyahu” energy. Every bad thing this motherfucker does is framed as him not doing the opposite, good thing, enough.

Teapot,

Student loan interest rates are set by statute

TheLepidopterists,
@TheLepidopterists@hexbear.net avatar

I’m glad you mentioned this, should have read the article.

Well I guess this isn’t his fault specifically but I still hate that old ghoul

goferking0,

but he’s using old laws to forgive loans that should have been forgiven years ago to cancel debt

came_apart_at_Kmart,

the coolest thing about the federal student loan program, besides how the servicing of the loan has been privatized since god knows when and is naturally rife with complaints and scandal, is that for as far back as i can remember, the “subsidized” rate that the federal government will loan a qualifying (low-income) college student money has always been higher than the interest rate someone can get from a private loan to buy a house. and of course the loans at the subsidized rate are not enough to cover costs at an in-state school, so you also have to take out “unsubsidized” loans from the federal government, which are like double the interest rate of the subsidized loans. and, those are not often enough either, to cover housing, so then you get into private loans.

and none of these can be discharged due to bankruptcy, specifically due to the efforts of the senator from MBNA, Joe Biden.

Frank,
@Frank@hexbear.net avatar

I remain astonished at how he is the personal architect of so many crises"

UrsineApathy,

and of course the loans at the subsidized rate are not enough to cover costs at an in-state school, so you also have to take out “unsubsidized” loans from the federal government, which are like double the interest rate of the subsidized loans.

Thank you for saying this because people always conveniently forget this part. I went to a “budget” state school and subsidized loans only covered maybe half of any given semesters tuition and nothing else. If you needed to make rent, eat food or pay for the rest of tuition you needed to find money elsewhere. I worked full-time through school and still barely was able to to survive and had to take additional loans.

emizeko,
@emizeko@hexbear.net avatar

maybe education shouldn’t be a profit center

Assian_Candor,
@Assian_Candor@hexbear.net avatar

Jesus Christ 8% people will never get out from under that

I have paid more in interest than my principal and I’m locked in at 5%

It’s fucking criminal that they charge at all for education but the interest rate spread between the 30 year Treasury note and student loans is extra egregious because these loans are federally backed. It’s a naked wealth transfer from low and middle income students to finance capital.

UrsineApathy,

I started my undergraduate just after the worst of the '08 market crash when rates were also at this level. Saddling a teenager with paying off tens of thousands of dollars at 7.5% interest literally crippled me. These rate increases are just kicking the can down to road to a future generation so that they can espouse headlines that they’ve done something beneficial while doing nothing to help fix the problem. All of the “forgiveness” pieces we’ve been seeing are just them fixing the broken promises through the 10 year repayment forgiveness and PLSF programs anyway.

Assian_Candor,
@Assian_Candor@hexbear.net avatar

And chuds are still malding about that

applepie,

The end goal is debt slavery so people submit into endless wage slavery with out a fight.

someone,

The harm reduction candidate, ladies and gentlemen.

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