ATLANTA — Interest rates on student loans are about to increase but not to the level they’ve been in the past.
On Tuesday, the U.S. Treasury will make decisions that will increase the interest rates on federal student loans. The Federal Reserve’s move to increase interest rates have already impacted private loans.
Madison Keys, a sophomore at Georgia State, borrowed money to attend college. However, she’ll need to borrow more to finish school.
“It’s only about $5,000 so far,” she told 11Alive. “Of course, it’s going to be more by the time I graduate. I’m just trying not to think about it.”
The rate on federal student loans is fixed and changes once a year.
“It seems very likely that the new interest rates will be at least a full percentage point higher, maybe one and a half percentage points higher,” Mark Kantrowitz, an expert in student financial aid, explained. “Probably close to $1,000 and that’s per $10,000 borrowed.”
Although the decision on how much to raise the interest rate will be made this week, it won’t take effect until July 1. Students can’t borrow money for next year until then.
Kantrowitz said in this era of high inflation, the price hike might seem discouraging, but there’s a silver lining.
“The interest rates are still going to be low compared to past interest rates,” he said. “At one point, student loans were as high as 6.8%. and on parent loans as high as 8.5%”
According to the National Center for Education Statistics, the cost of going to a four year public university has increased about 13% over the past decade.
Meanwhile, Keys has scholarships along with the loans she’ll have to pay back.
“Hopefully I’ll get a job that allows me to pay it back relatively quickly,” she added.
First, there’s the college degree that’s costing her more and more each year.