The Ministry of Education has not officially announced the new student loan rates, but Mr Kantrovitz calculated them using a government formula that adds an additional flat rate depending on the type of loan.
The rate on direct loans for graduate students will rise to 5.28 percent from 4.3 percent. The rate on PLUS loans, supplemental loans available to parents and graduate students, will rise to 6.28 percent from 5.3 percent.
The new rates do not apply to private student loans.
Here are some questions and answers about student loans:
Can I now take out a loan for the next year to get lower rates?
Not. New federal student loan rates are set for each academic year commencing July 1, based on a formula set by Congress. College loans are based on the information you provide on the Free Application for Federal Student Aid or the FAFSA.
The increase does not affect the rates on student loans already received. After setting the loan rate, they are fixed for the entire loan term.
How much can I borrow?
There restrictions on the amount of money students can borrow in federal loans, annually and generally. Typically, first-year students can borrow up to $ 5,500, sophomores up to $ 6,500. For the third and fourth years, the limit is $ 7,500. The total limit is $ 31,000, higher than the cumulative annual limit in case a student takes more than four years to pursue higher education. The limits are higher for independent undergraduate and graduate students.
When will the current pause in student loan payments end?
In March 2020, as part of the government’s pandemic relief program, Congress authorized most federal student loan borrowers temporarily stop monthly payments and establish a zero interest rate on loans during the suspension. The suspension of powers has been extended several times, most recently in early 2021 when the Biden administration extended it to at least September 30. Some borrower advocates support another extension, but it is not known if this will happen.