FED Rate Cut to Zero - Student Loans?

[mrneatteeth]

How does the FED rate cut impact our student loans going forward? I will be a D1 this upcoming fall and am assuming that our interest rate on our student loans will be significantly lower than before. Does the FED cut to zero mean our federal student loans will be 1-2%?


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[sobertiger]

It will be lower but not that low. The fed rate was already really low for a while since 2009, but graduate loans were still around 6-7%. Subsidized and unsubsidized loans had lower rates but they were still around 4%.

 

[mrneatteeth]

It will be lower but not that low. The fed rate was already really low for a while since 2009, but graduate loans were still around 6-7%. Subsidized and unsubsidized loans had lower rates but they were still around 4%.

For grad loans, last year was the first time in several years that the government actually LOWERED the rate. I imagine after this, they announce another decrease in May


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[batman12345]

For grad loans, last year was the first time in several years that the government actually LOWERED the rate. I imagine after this, they announce another decrease in May


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kinda crazy how 'lowering' the rate brought it to 7%!

 

[OGDetroit]

Taken from USA TODAY:

"If the yield on the 10-year Treasury fell all the way to zero, new loans to undergraduates would be 2.05%, graduate students would pay 3.6%, and the rate on parent PLUS and grad PLUS loans would be 4.6%, according to Humann.

On Friday, the 10-year Treasury yield settled at 0.946% after falling as low as an all-time low of 0.318% earlier this month. As long as it stays below 2.48% on May 12 – last year’s benchmark – rates on federal student loans taken out for the 2020-21 academic year will go down on July 1, Humann said."

 

[zToothinator]

To clarify what OGDetroit quoted, interest rates on federal loans are dictated each year in May based off of the 10 year treasury note + a fixed percentage.