The coronavirus may be upending the way colleges operate, but at least students and their families will get a break if they borrow money from the government for an education.
The interest rate on new federal student loans for undergraduates will fall to a record low this summer. Those students will pay a rate of 2.75 percent on loans for the coming academic year, down from 4.53 percent last year. It has been 15 years since rates near that low were available, according to Mark Kantrowitz, publisher of Savingforcollege.com.
Over a 10-year repayment period, the new rate will save borrowers about $1,000 for each $10,000 borrowed, Mr. Kantrowitz calculated.
Rates for other types of loans fell, too, although not to record lows. The rate for graduate students will fall to 4.3 percent, from 6.08 percent. The rate on PLUS loans, which are additional loans available to parents and graduate students, will fall to 5.3 percent, from 7.08 percent.
The rates take effect on July 1 for new loans borrowed for the 2020-21 academic year and remain fixed for the life of the loan.
The federal government hasn’t formally announced the rates, but Mr. Kantrowitz calculated them using the formula adopted by Congress. Since 2013, rates on student loans have been set each spring, based on the May sale of 10-year Treasury notes.
Jessica Thompson, associate vice president of the Institute for College Access and Success, a nonprofit research and advocacy group, said the low rates were a “silver lining” during the current economic turmoil.
Students, however, may be wondering whether it is worth borrowing to attend college