The U.S. Department of Education announced Tuesday that the interest rates on federally backed student loans will increase to 6.53% for the 2024-2025 academic year.

According to the analysis of student loan expert Mark Kantrowitz, borrowers will be paying the highest interest rates for undergraduate loans in more than a decade. The current interest rate for an undergraduate loan in 2023-2024 is 5.5%.

Kantrowitz noted: “The increase in interest rates yields an increase in the monthly student loan payment of about $5.20 to $5.54 per $10,000 borrowed, assuming a 10-year repayment term, as compared with last year’s interest rates.”

For graduate students, loans will rise over 1% from the current rate of 7.05% to a new rate of 8.08% in 2024-2025. Plus loans, or those for graduate students and parents, will similarly rise from 8.05% to 9.08%. Kantrowitz noted those rates haven’t reached such levels in over 20 years.

The rise in student loan rates come at a time when college debt relief is a key component of President Joe Biden’s reelection campaign. While the administration is looking to wipe millions of loans off the books, new borrows will be burdened with more expensive loans for decades.

In August of 2022, Biden proposed a massive program to cancel billions in student loan debt, yet that initial attempt was declared unconstitutional by the Supreme Court the following year. Not to be deterred, the Biden administration announced in April a new plan to “provide debt relief to over 30 million Americans” stating that it would not only benefit borrowers, but the “entire economy” as well.

James Morley III ✉

James Morley III is a writer with more than two decades of experience in entertainment, travel, technology, and science and nature. 

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