Federal student loan interest rates for the upcoming 2020-21 school year will be set lower than the 2019-20 school year. The 2020-21 rates will be as follows:
- Undergraduate Direct Loans: 2.75%
- Graduate Student Direct Loans: 4.3%
- Parent PLUS Loans: 5.3%
Student loan interest rates are set annually and apply to any loan taken during that school year. The interest rates are fixed for the life of the loan.
Typically, the repayment period for a student loan is 10 years.
Since borrowing to pay for college expenses can be a risk, students and parents should discuss the costs and benefits of taking loans for a year’s worth of college expenses. Parents and students can also forecast a total amount of debt a student believes is most managable after college graduation, in case a student plans to take student loans for multiple years of college.
Video from CNBC