# Student Interest Rates Soared to a Record High on July 1stâ€”Discover What It Means for You!

- Alfia Khan |
- August 17, 2024

Updated By

Reviewed By

Contents

Effective July 1, 2024, the fixed interest rates for federal loans have risen from **5.50%** to **6.53%** for undergraduate loans and from **7.05%** to **8.08%** for graduate loans.

**Key Takeaways**

- The average student loan debt at graduation stands at
[Based on 12 years data from 2013 to 2024]**$****40,140** - For 10-year standard repayment plan:
- Associate degree holders are required to make a monthly payment of
**$161**to cover the median debt amount of**$14,160** - Bachelors degree holders are required to make a monthly payment of
**$271**to cover the median debt amount of**$23,796** - Masters degree holders are required to make a monthly payment of
**$522**to cover the median debt amount of**$42,903** - Professional degree holders are required to make a monthly payment of
**$2049**to cover the median debt amount of**$168,277** - Doctoral degree holders are required to make a monthly payment of
**$987**to cover the median debt amount of**$81,072**

- Associate degree holders are required to make a monthly payment of
- Additionally, the burden of interest for loans disbursed after July 1 2024 will escalate:
- Interest payments on undergraduate direct subsidized and unsubsidized loans have surged by
**20.54%**. - For graduate or professional direct unsubsidized loans, the interest due has risen by
**16.30%**, all calculated over a 10-year standard repayment timeframe.

- Interest payments on undergraduate direct subsidized and unsubsidized loans have surged by

**Fixed Interest Rates for federal loans over the years**

Each year, federal student loan interest rates are updated, and the interest rate depends on:

- the loan type and
- the first disbursement date of the loan.

Lets look at how the interest rates have varied over the years.

Note: 13-14 implies loans disbursed in the period Jul 1 2013 to Jun 30 2014, year 14-15 implies loans disbursed in the period Jul 1 2014 to Jun 30 2015 and so on.

**Fixed Interest Rates for Undergraduate Direct Subsidized and Unsubsidized Loans over the years**

- For the year 2024-25, the interest rate for Undergraduate Direct Subsidized and Unsubsidized Loans has surged by
**18.72%**, rising from**5.5%**to**6.53%**compared to 2023-24. - The Fixed Interest Rates for undergraduate debt have increased by
**69%**over the past 12 years.

Effective 1 Jul 2024, for an interest rate of **6.53%**, every addition of **$1,000** will raise the monthly payment by **$11.37**. [For a standard 10-year repayment plan]

**Fixed Interest Rates for Graduate or Professional Direct Unsubsidized Loans over the years**

- For the year 2024-25, the interest rate for Graduate or Professional Direct Unsubsidized Loans has surged by
**14.61%**, rising from**7.05%**to**8.08%**compared to 2023-24. - The Fixed Interest Rates for graduate/ professional debt have increased by
**49%**over the past 12 years.

Effective 1 Jul 2024, for an interest rate of **8.08%**, every addition of **$1,000** will raise the monthly payment by **$12.17**. [For a standard 10-year repayment plan]

Source: Interest Rates and Fees for Federal Student Loans

**Fixed Interest Rates for PLUS Loans over the years**

- For the year 2024-25, the interest rate for Parents and Graduate or Professional Direct PLUS Loan has surged by
**12.79%**, rising from**8.05%**to**9.08%**compared to 2023-24. - The Fixed Interest Rates for Direct PLUS loans have increased by
**42%**over the past 12 years.

Effective 1 Jul 2024, for an interest rate of **9.08%**, every addition of **$1,000** will raise the monthly payment by **$12.69**. [For a standard 10-year repayment plan]

Source: Interest Rates and Fees for Federal Student Loans

**Student loan debt by credential**

The amount of student loan debt varies by the type degree being pursued – Associate, Bachelor’s, Master’s, Professional & Doctoral. A 2022 Texas Public Policy Foundation study analyses the student loan debt by credential.

Refer to the chart below for the **Weighted Median College Student Loan Debt*** at Graduation by credential for 2022.

**Source: **COLLEGE STUDENT LOAN DEBT: 2022

*All values mentioned are in 2021 US Dollars

**How much do you have to pay for a 10-year standard repayment plan now?**

Refer below the computation for interest rates for the standard 10-year repayment plan for students taking out loans in 23-24 (1 Jul’23 to 30 Jun’24) vs students taking out loans for years 24-25 (1 Jul’24 to 30 Jun’25).

**Estimated impact of rising interest rates for Associate Degree Holders**

For a median student loan debt of **$14,160** for Associate degree holders

- The Total Interest for loans disbursed in the year 24-25 will increase to
**$5,160**, up from**$4,281**for loans disbursed in the year 23-24. A sharp increase of**20.54%** - The Monthly Payment for loans disbursed in the year 24-25 will increase to
**$161**, up from**$154**for loans disbursed in the year 23-24. - The Total Payment over a 10 year period for loans disbursed in the year 24-25 will increase to
**$19,320**, up from**$18,441**for loans disbursed in the year 23-24.

Refer Table 1.1 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Associate degree holders.

Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|

23-24 | 5.50% | $154 | $18,441 | $4,281 |

24-25 | 6.53% | $161 | $19,320 | $5,160 |

**Estimated impact of rising interest rates for Bachelor Degrees** **Holders**

For a median student loan debt of **$23,796** for Bachelor degree holders

- The Total Interest for loans disbursed in the year 24-25 will increase to
**$8,671**, up from**$7,194**for loans disbursed in the year 23-24. A sharp increase of**20.54%** - The Monthly Payment for loans disbursed in the year 24-25 will increase to
**$271**, up from**$258**for loans disbursed in the year 23-24. - The Total Payment for loans disbursed in the year 24-25 will increase to
**$32,467**, up from**$30,990**for loans disbursed in the year 23-24.

Refer Table 1.2 below for comparison of loan repayment amounts for 23-24 vs 24-25 for bachelor’s degree holders.

Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|

23-24 | 5.50% | $258 | $30,990 | $7,194 |

24-25 | 6.53% | $271 | $32,467 | $8,671 |

**Estimated impact of rising interest rates for Master’s Degrees** **Holders**

For a median student loan debt of **$42,903** for Master’s degree holders

- The Total Interest for loans disbursed in the year 24-25 will increase to
**$19,779**, up from**$17,007**for loans disbursed in the year 23-24. A sharp increase of**16.30%** - The Monthly Payment for loans disbursed in the year 24-25 will increase to
**$522**, up from**$499**for loans disbursed in the year 23-24. - The Total Payment for loans disbursed in the year 24-25 will increase to
**$62,682**, up from**$59,910**for loans disbursed in 23-24.

Refer Table 1.3 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Master’s degree holders.

Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|

23-24 | 7.05% | $499 | $59,910 | $17,007 |

24-25 | 8.08% | $522 | $62,682 | $19,779 |

**Estimated impact of rising interest rates for Professional Degrees** **Holders**

For a median student loan debt of **$168,277** for Professional degree holders

- The Total Interest for loans disbursed in the year 24-25 will increase to
**$77,577**, up from**$66,704**for loans disbursed in the year 23-24. A sharp increase of**16.30%** - The Monthly Payment for loans disbursed in the year 24-25 will increase to
**$2,049**, up from**$1,958**for loans disbursed in 23-24. - The Total Payment for loans disbursed in the year 24-25 will increase to
**$245,854**, up from**$234,981**for loans disbursed in the 23-24.

Refer Table 1.4 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Professional degree holders.

Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|

23-24 | 7.05% | $1958 | $234,981 | $66,704 |

24-25 | 8.08% | $2049 | $245,854 | $77,577 |

**Estimated impact of rising interest rates for Doctoral Degree** **Holders**

For a median student loan debt of **$81,072** for Doctoral degree holders

- The Total Interest for loans disbursed in the year 24-25 will increase to
**$37,375**, up from**$32,137**for loans disbursed in the year 23-24. A sharp increase of**16.30%** - The monthly payment for loans disbursed in the year 24-25 will increase to
**$987**, up from**$943**for loans disbursed in the year 23-24. - The Total payment for loans disbursed in the 24-25 year will increase to
**$118,447**, up from**$113,209**for loans disbursed in the year 23-24.

Refer Table 1.5 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Doctoral degree holders.

Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|

23-24 | 7.05% | $943 | $113,209 | $32,137 |

24-25 | 8.08% | $987 | $118,447 | $37,375 |

**Impact of rising interest rate on time to repay the loan**

Let’s examine how rising interest rates impact the loan repayment duration, influenced by loan type and monthly payments based on student credentials.

**Time to repay loan for Associate Degree Holders**

**Median Student loan Debt:** $14,160**Change in Interest rate**: From 5.50% in 23-24 to 6.53% in 24-25

- For a
**$300**monthly payment: The time to repay the loan increases slightly from**4 years and 5 months**(23-24) to**4 years and 7 months**(24-25). - For a
**$600**monthly payment: The time to repay the loan also increases slightly from**2 years and 1 month**(23-24) to**2 years and 2 months**(24-25).

Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |

Fixed Interest Rate | 5.50% | 6.53% |

Monthly Payment $300 | 4 years and 5 months | 4 years and 7 months |

Monthly Payment $600 | 2 years and 1 month | 2 years and 2 months |

**Bachelor’s Degree**

**Median Student loan Debt:** $23,796**Change in Interest rate**: From 5.50% in 23-24 to 6.53% in 24-25

- With a
**$300**monthly payment, the time to repay the loan increases slightly from**8 years and 3 months**(23-24) to**8 years and 8 months**(24-25). - With a
**$600**monthly payment, the time to repay the loan also increases slightly from**3 years and 8 months**years (23-24) to**3 years and 9 months**(24-25).

Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |

Fixed Interest Rate | 5.50% | 6.53% |

Monthly Payment $300 | 8 years and 3 months | 8 years and 8 months |

Monthly Payment $600 | 3 years and 8 months | 3 years and 9 months |

**Master’s Degree**

**Median Student loan Debt:** $42,903**Change in Interest rate**: From 7.05% in 23-24 to 8.08% in 24-25

- With a
**$300**monthly payment, the time to repay the loan increases slightly from**26 years and 1 month**(23-24) to**40 years and 11 months**(24-25). - With a
**$600**monthly payment, the time to repay the loan also increases slightly from**7 years and 9 months**(23-24) to**8 years and 2 months**(24-25).

Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |

Fixed Interest Rate | 7.05% | 8.08% |

Monthly Payment $300 | 26 years and 1 month | 40 years and 11 months |

Monthly Payment $600 | 7 years and 9 months | 8 years and 2 months |

**Professional Degree**

**Professional Degree**

**Median Student loan Debt:** $168,277**Change in Interest rate**: From 7.05% in 23-24 to 8.08% in 24-25

- With a
**$1500**monthly payment, the time to repay the loan also increases slightly from**15 years and 4 months**(23-24) to**17 years and 6 months**(24-25).

- With a
**$2500**monthly payment, the time to repay the loan increases slightly from**7 years and 2 months**(23-24) to**7 years and 6 months**(24-25).

Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |

Fixed Interest Rate | 7.05% | 8.08% |

Monthly Payment $1500 | 15 years and 4 months | 17 years and 6 months |

Monthly Payment $2500 | 7 years and 2 months | 7 years and 6 months |

**Doctoral Degree**

**Median Student loan Debt:** $81,072**Change in Interest rate**: From 7.05% in 23-24 to 8.08% in 24-25

- With a
**$1000**monthly payment, the time to repay the loan increases slightly from**9 years and 2 months**(23-24) to**9 years and 10 months**(24-25). - With a
**$1500**monthly payment, the time to repay the loan also increases slightly from**5 years and 5 months**(23-24) to**5 years and 7 months**(24-25).

Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |

Fixed Interest Rate | 7.05% | 8.08% |

Monthly Payment $1000 | 9 years and 2 months | 9 years and 10 months |

Monthly Payment $1500 | 5 years and 5 months | 5 years and 7 months |

**Average student loan debt over the years**

**Average student loan debt over the years**

Americans owe **$1.75 Trillion** in student loan debt as of the first quarter of **2024**, while the number was **$1.18 Trillion** in the first quarter of **2014**.

- The average of student loan debt at Graduation has been
**$**( in May 2024 US Dollars) for the past 12 years.**40,140** **3.3%**-The latest year-on-year inflation rate before seasonal adjustment as of May 2024.

**The year-wise trend for repayment* based on Debt per student at the Graduation level**

Year | Fixed Interest Rate | Debt in May 2024 Dollars^{1} | Monthly Payment | Total Payment | Total Interest |
---|---|---|---|---|---|

2024 | 6.53% | $38,066^{2} | $433 | $51,938 | $13,872 |

2023 | 5.50% | $38,418 | $417 | $50,032 | $11,614 |

2022 | 4.99% | $39,765 | $422 | $50,589 | $10,824 |

2021 | 3.73% | $41,806 | $418 | $50,151 | $8,345 |

2020 | 2.75% | $44,020 | $420 | $50,400 | $6,380 |

2019 | 4.53% | $43,030 | $447 | $53,589 | $10,559 |

2018 | 5.05% | $41,939 | $446 | $53,502 | $11,563 |

2017 | 4.45% | $40,877 | $423 | $50,719 | $9,842 |

2016 | 3.76% | $39,735 | $398 | $47,734 | $7,999 |

2015 | 4.29% | $38,694 | $397 | $47,654 | $8,960 |

2014 | 4.66% | $37,132 | $388 | $46,524 | $9,392 |

2013 | 3.86% | $35,398 | $356 | $42,724 | $7,326 |

**Source: ****Average Student Loan Debt by Year**

**1: Debt in May 2024 Dollars computed using ****Inflation Calculator**** **

**2: Projected based 2024 Q1 data ****Federal Reserve Board – Consumer Credit – G.19**** **

***All are calculated in May 2024 dollars**

- The Weighted Average Interest Rate for the past 12 years is
**4.49%**for Debt per student at Graduate - The total interest to be paid for 2024-25 is
**89.34%**higher than the interest paid in 2013-14. - On average, the Total Interest for a 10-year repayment plan at the graduation level has been
**$9,723**over the past 12 years. - On average, the Monthly Payment for a 10-year repayment plan at the graduation level has been
**$414**over the past 12 years. - On average, the Total Payment for a 10-year repayment plan at the graduation level has been
**$49,630**over the past 12 years.

**Annexure**

**Median Debt by Credential**

Interest rates for different degrees are taken as per Federal Student Aid 2024 data

For the calculations, the median student loan debt for 2022 is used. Source: Texas Public Policy Foundation 2022 report. Median debt by Credential as of 2022 as below:

Credential | Median Debt |
---|---|

Associate Degree | $14,160 |

Bachelor’s Degree | $23,796 |

Master’s Degree | $42,903 |

Professional Degree | $168,277 |

Doctoral Degree | $81,072 |

**Fixed Repayment Plans**

All payments are computed for the standard 10-year repayment plan as per Federal Student Loan Repayment Plans.

Fixed Plans | Standard Repayment Plan | Graduated Repayment Plan | Extended Repayment Plan |
---|---|---|---|

Eligibility | All borrowers | All borrowers | All borrowers, but federal direct loan and Federal Family Education Loan (FFEL) borrowers must owe more than $30,000 |

Monthly Payment Amount | Payments are fixed to ensure loans are paid off within 10 years (10 to 30 years for Consolidation Loans) | Payments start low and increase every two years, ensuring loans are paid off within 10 years (10 to 30 years for Consolidation Loans) | Payments can be fixed or graduated, ensuring your loans are paid off within 25 years. |

**Year-wise trend Debt per student at the Graduation**

Year | Debt per Student | Debt in May 2024 Dollars | Fixed Interest Rate |
---|---|---|---|

2024 | $38,066 | $38,066 | 6.53% |

2023 | $37,650 | $38,418 | 5.50% |

2022 | $37,570 | $39,765 | 4.99% |

2021 | $37,110 | $41,806 | 3.73% |

2020 | $36,510 | $44,020 | 2.75% |

2019 | $35,210 | $43,030 | 4.53% |

2018 | $33,550 | $41,939 | 5.05% |

2017 | $32,090 | $40,877 | 4.45% |

2016 | $30,550 | $39,735 | 3.76% |

2015 | $29,140 | $38,694 | 4.29% |

2014 | $27,760 | $37,132 | 4.66% |

2013 | $26,270 | $35,398 | 3.86% |

**Source: ****Average Student Loan Debt by Year**

**Total student loan debt and undergraduate enrollment rate over the years**

Year | Total Debt (in Millions) | Undergraduate Enrollment |
---|---|---|

2024 | 1,751,735.86* | 16,144,761 |

2023 | 1,729,253.32 | 15,887,414 |

2022 | 1,764,067.41 | 15,870,262 |

2021 | 1,733,415.18 | 15,448,420 |

2020 | 1,693,860.24 | 15,884,559 |

2019 | 1,637,880.70 | 16,557,539 |

2018 | 1,566,903.43 | 16,616,370 |

2017 | 1,488,895.48 | 16,773,036 |

2016 | 1,405,332.16 | 16,874,649 |

2015 | 1,320,248.14 | 17,046,673 |

2014 | 1,235,751.47 | 17,294,136 |

2013 | 1,145,550.75 | 17,476,304 |

*Based on 2024 Q1 value

**Source: **Fast Facts: Enrollment (98), Federal Reserve Board – Consumer Credit – G.19

- Undergraduate enrollment has increased by
**1.62%**compared to last year. - Enrollment was decreasing until 2021; since then, the average rate of increase has been
**1.49%**. - The total student loan debt in America crossed
**1.7 Trillion**in the year**2021**and**1.5****Trillion**in the year**2018**.

**References**

- Interest Rates and Fees for Federal Student Loans, federal Student Aid (Interest Rates and Fees for Federal Student Loans)
- College Student Loan Debt: 2022, Texas Public Policy Foundation (COLLEGE STUDENT LOAN DEBT: 2022)
- Average Student Loan Debt by Year, Education Data Initiative (Average Student Loan Debt by Year)
- Federal Student Loan Portfolio, Federal Student Aid (Federal Student Loan Portfolio)
- Federal Student Loan Repayment Plans, Federal Student Aid (Federal Student Loan Repayment Plans)
- Consumer Credit Outstanding, Board of Governors of the Federal Reserve System (Federal Reserve Board – Consumer Credit – G.19)
- National Center for Education Statistics – Undergraduate Enrollment (Fast Facts: Enrollment (98))
- Consumer Price Index – May 2024, Bureau of Labor Statistics (Consumer Price Index – May 2024)