The cost of borrowing money from the federal government to pay for college will increase in the coming academic year.
The interest rates on new federal student loans are set to jump by more than two-thirds of a percentage point following the U.S. Treasury Department’s sale today of 10-year notes, which is the government security to which the rates are tied.
For new undergraduate student loans, the interest rate will increase to 4.45 percent, up from 3.76 percent.
The rate on direct loans for graduate students will rise to 6 percent from this year’s 5.31 percent.
And the interest rates on federal PLUS loans — both for graduate students or parents paying for their children’s education — will be 7 percent, up from the current 6.31 percent.
The new interest rates take effect on July 1 for the 2017-18 school year and are fixed for the lifetime of the loan. The changes today do not affect borrowers who already have federal student loans.