New federal loan interest rates?
Federal Student Loan Interest Rates
Between July 1, 2023, and June 30, 2024, federal student loan rates for new undergraduate loans are 5.50%. New graduate loan rates are 7.05% and new parent PLUS loan interest rates are 8.05% during that same time period.
Federal Student Loan Interest Rates
Between July 1, 2023, and June 30, 2024, federal student loan rates for new undergraduate loans are 5.50%. New graduate loan rates are 7.05% and new parent PLUS loan interest rates are 8.05% during that same time period.
The federal student loan interest rate for undergraduates is 5.50% for new loans taken out for the 2023-24 school year, effective from July 1, 2023 to June 30, 2024. Federal rates for graduate student loans and PLUS loans are higher — 7.05% and 8.05%, respectively.
Right now, the Fed interest rate is 5.25% to 5.5%. The FOMC established that rate in late July.
| Period loans first disbursed | Direct Subsidized | Direct Unsubsidized |
|---|---|---|
| Undergraduate | Graduate | |
| 7/1/22 - 6/30/23 | 4.99 percent | 6.54 percent |
| 7/1/21 - 6/30/22 | 3.73 percent | 5.28 percent |
| 7/1/20 - 6/30/21 | 2.75 percent | 4.3 percent |
According to Studentaid.gov, borrowers who take out federal student loans on or after July 1, 2023, and before July 1, 2024 will pay: 5.50% on Direct Subsidized Loans and Direct Unsubsidized Loans. 7.05% on Direct Unsubsidized Loans. 8.05% on Direct Plus Loans.
Each year in May, new federal student loan rates are set by Congress, and the federal student loan interest rates for 2022-2023 will be rising. The federal student loan interest rates are set by considering the 10-year Treasury note's high yield and adding the 2.05% fixed congressional premium.
Personal loans currently have an average interest rate of 11.47%, which is higher than pre-pandemic levels. Rising inflation and a rising rate environment will increase serious delinquencies to levels not seen since 2010, particularly among credit card and personal loan products.
Annual Federal Interest Rates for June 2023
Short-term rate is 4.43 percent. Mid-term rate is 3.56 percent. Long-term rate is 3.79 percent.
Lower personal loan rates may be on the horizon in 2024 after the Fed made progress curbing inflation at the end of 2023.
Which bank has the lowest interest rate on personal loans?
| Bank | Interest Rate (p.a.) | Processing Fee |
|---|---|---|
| Yes Bank | 10.99% p.a. onwards - 20% p.a. | Up to 2% |
| Kotak Mahindra Bank | 10.99% and above | Up to 3% |
| Axis Bank | 10.49% p.a.- 22% p.a. | Up to 2% of the loan amount |
| IndusInd Bank | 10.25% p.a. - 26% p.a. | 3% onwards |
| Loan Amount | Loan Term (Years) | Estimated Fixed Monthly Payment* |
|---|---|---|
| $5,000 | 3 | $154.36 |
| $5,000 | 5 | $103.77 |
| $10,000 | 3 | $313.32 |
| $10,000 | 5 | $207.54 |
| Bank | Minimum interest rate on personal loan (%) |
|---|---|
| HDFC Bank | 10.5 |
| State Bank of India | 12.30 |
| Bank of Baroda | 13.15 |
| Punjab National Bank | 13.75 |
Fed Rate Hikes In 2023
The first one occurred in February, when the Fed raised the rate by 25 basis points, or 0.25%, bringing the target range to 4.50% – 4.75%. Additional hikes of 0.25% occurred again in both March and May 2023, ultimately bringing the federal funds rate to a target range of 5.00% – 5.25%.
In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point increase in the primary credit rate to 5.5 percent, effective July 27, 2023.
A good personal loan interest rate is typically one that's lower than the national average rate, which is 12.17% as of Q3 2023. Because interest rates can vary based on a number of factors, including economic conditions, that average can fluctuate over time.
| FOMC Meeting Date | Rate Change (bps) | Federal Funds Rate |
|---|---|---|
| July 26, 2023 | +25 | 5.25% to 5.50% |
| May 3, 2023 | +25 | 5.00% to 5.25% |
| March 22, 2023 | +25 | 4.75% to 5.00% |
| Feb 1, 2023 | +25 | 4.50% to 4.75% |
If you signed up for a Sallie Mae loan when you entered college, you may have a high interest rate because you were a college student with no credit history and no full-time income. If you have a stable job and a good credit score now, you'll likely be eligible for a lower interest rate.
Average 30-Year Fixed Rate
After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024.
Interest can make student loans more expensive, while inflation can make that debt harder to manage alongside other bills. Paying off some of your debt during your studies could ease the burden later on and save you money on interest.
Can I deduct student loan interest on my taxes?
Reporting the amount of student loan interest you paid in 2022 on your federal tax return may count as a deduction. A deduction reduces the amount of your income that is subject to tax, which may benefit you by reducing the amount of tax you may have to pay.
If you don't have an excellent or even good credit score, your interest rate will be higher than that of someone with a better score. You have private student loans: Federal student loans have several protections, like deferment, forbearance and income-driven repayment plans.
Why might I borrow? To provide a bridge loan or secure liquidity: Borrowing can mitigate the need to sell assets with high return potential. Borrowing can also help avoid realizing taxable capital gains and transaction costs, while still providing liquidity to fund business ventures, or increase investments.
Most economists predict interest rates to drop come 2024; some say 2025. Bankrate's quarterly Economic Indicator Survey found that 96 percent economists who responded predict that the Fed will begin to cut rates in 2024, while 6 percent predicted that borrowers won't see any cuts until 2025.
If handled responsibly, personal loans can also serve as a tool to build wealth. Some of the ways personal loans can help you increase your net worth include improving your cash flow through debt consolidation and giving you the necessary capital to invest in a variety of things.
