Will interest rates for federal student loans raise or lower?
Asked by Virginia CI've been getting a lot of calls from random companies about consolidating my student loans, which would lock in an interest rate I think. Do you think student loan interest rates will go up or down in the next couple years? Thanks.
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Answered by jasmine540
Student loan Interest rates have been on a rising trend for the last 5 years. Student loan rates usually follow the changing trends of the prime rate or the LIBOR index. that is, when the Prime rate starts to show a rising trend, student loans may show that trend as well. The bottom line is, the federal government sets the Federal Student loan rates every July 1st. Each year, the government has raised the student interest rate (reflecting the Prime rate). Generally, it is anticipated that student interest rates can continue to rise or stay at a high rate in the next few years, although the government guarenteed the rates of federal loans never to exceed 8.5 percent. But this cap does not carry over to non-federal student loans. Consolidating your loans now may be a good idea if your prior loans each carry an individual rate that is lower than the current federal studen tloan interest rate of 6.8. if you consolidate your loans, basically you will be assigned an AVERAGE rate based non the total rates of each of your loans. So if your loans carry interest rates anywhere between 3-5%, it may be a good idea to consolidate them. You should speak to a lender about consolidating and find out what your weighted-average interest rate would be and see if that is any lower compared to the 6.8 perfect.
Student loan Interest rates have been on a rising trend for the last 5 years. Student loan rates usually follow the changing trends of the prime rate or the LIBOR index. that is, when the Prime rate starts to show a rising trend, student loans may show that trend as well. The bottom line is, the federal government sets the Federal Student loan rates every July 1st. Each year, the government has raised the student interest rate (reflecting the Prime rate). Generally, it is anticipated that student interest rates can continue to rise or stay at a high rate in the next few years, although the government guarenteed the rates of federal loans never to exceed 8.5 percent. But this cap does not carry over to non-federal student loans. Consolidating your loans now may be a good idea if your prior loans each carry an individual rate that is lower than the current federal studen tloan interest rate of 6.8. if you consolidate your loans, basically you will be assigned an AVERAGE rate based non the total rates of each of your loans. So if your loans carry interest rates anywhere between 3-5%, it may be a good idea to consolidate them. You should speak to a lender about consolidating and find out what your weighted-average interest rate would be and see if that is any lower compared to the 6.8 perfect.
