Rates on federal student loans may increase by 1 percentage point

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It may soon be more expensive to borrow federal student loans. The government sets interest rates on its education loans once a year. The rate, which runs from July 1 to June 30 the following year, is based in part on the May auction of the 10-year Treasury note . This year, that Treasury yield has been on the rise while the Federal Reserve has kept interest rates high until inflation comes down. The May 8 auction put the high yield rate at 4.483%.
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As a result, federal student loan rates may increase in the 2024-2025 academic year, according to an estimate by higher education expert Mark Kantrowitz. The rate could go up by 1 percentage point.