Yesterday, the Consumer Financial Protection Bureau (CFPB) updated their Paying for College tool. This tool gives students and prospective students the ability to get an idea of how to pay for college by understanding the different repayment options as well as other information that can help students make informed financial decisions regarding their education.
What makes this of note is the CFPB has issued their projections for interest rates after July 1. These interest rates are based on the ten year note from the Treasury Dept. Next month, the Treasury Dept’s bond auction will take place, setting the interest rates officially.
But in the meantime, here are the projections from the CFPB:
For Direct Sub and Unsub Loans (undergraduates), the current rate is 3.86%, and is projected to rise to 5.09%.
For Direct Sub and Unsub (grad), the current rate is 5.41%, and is projected to rise to 6.64%.
For Direct PLUS (parent/grad), the current rate is 6.41%, and is projected to rise to 7.64%.
This isn’t the highest jump historically, but a jump nonetheless. Even though these are projections, the expectation is even if they are not quite accurate, the rates will be rising regardless. Be sure to stay informed on your student loans and keep track of them to understand your interest rate and how any change in them will change your payment. As far as this increase is concerned, if you had a $5000 loan, your interest would be just over $3 more a month in your monthly payment, and for an undergrad loan, the overall increase over ten years would be around $355 total.
When the actual numbers are released, we will post them. It’ll be interesting to see how close the rates that have been projected actually come to the real numbers.
This has been another helpful post from your friends at Metro Business College.