Effective July 1, 2024, the fixed interest rates for federal loans have risen from 5.50% to 6.53% for undergraduate loans and from 7.05% to 8.08% for graduate loans.
Key Takeaways
- The average student loan debt at graduation stands at $40,140 [Based on 12 years data from 2013 to 2024]
- For 10-year standard repayment plan:
- Associate degree holders are required to make a monthly payment of $161 to cover the median debt amount of $14,160
- Bachelors degree holders are required to make a monthly payment of $271 to cover the median debt amount of $23,796
- Masters degree holders are required to make a monthly payment of $522 to cover the median debt amount of $42,903
- Professional degree holders are required to make a monthly payment of $2049 to cover the median debt amount of $168,277
- Doctoral degree holders are required to make a monthly payment of $987 to cover the median debt amount of $81,072
- Additionally, the burden of interest for loans disbursed after July 1 2024 will escalate:
- Interest payments on undergraduate direct subsidized and unsubsidized loans have surged by 20.54%.
- For graduate or professional direct unsubsidized loans, the interest due has risen by 16.30%, all calculated over a 10-year standard repayment timeframe.
Fixed Interest Rates for federal loans over the years
Each year, federal student loan interest rates are updated, and the interest rate depends on:
- the loan type and
- the first disbursement date of the loan.
Lets look at how the interest rates have varied over the years.
Note: 13-14 implies loans disbursed in the period Jul 1 2013 to Jun 30 2014, year 14-15 implies loans disbursed in the period Jul 1 2014 to Jun 30 2015 and so on.
Fixed Interest Rates for Undergraduate Direct Subsidized and Unsubsidized Loans over the years
- For the year 2024-25, the interest rate for Undergraduate Direct Subsidized and Unsubsidized Loans has surged by 18.72%, rising from 5.5% to 6.53% compared to 2023-24.
- The Fixed Interest Rates for undergraduate debt have increased by 69% over the past 12 years.
Effective 1 Jul 2024, for an interest rate of 6.53%, every addition of $1,000 will raise the monthly payment by $11.37. [For a standard 10-year repayment plan]
Fixed Interest Rates for Graduate or Professional Direct Unsubsidized Loans over the years
- For the year 2024-25, the interest rate for Graduate or Professional Direct Unsubsidized Loans has surged by 14.61%, rising from 7.05% to 8.08% compared to 2023-24.
- The Fixed Interest Rates for graduate/ professional debt have increased by 49% over the past 12 years.
Effective 1 Jul 2024, for an interest rate of 8.08%, every addition of $1,000 will raise the monthly payment by $12.17. [For a standard 10-year repayment plan]
Source: Interest Rates and Fees for Federal Student Loans
Fixed Interest Rates for PLUS Loans over the years
- For the year 2024-25, the interest rate for Parents and Graduate or Professional Direct PLUS Loan has surged by 12.79%, rising from 8.05% to 9.08% compared to 2023-24.
- The Fixed Interest Rates for Direct PLUS loans have increased by 42% over the past 12 years.
Effective 1 Jul 2024, for an interest rate of 9.08%, every addition of $1,000 will raise the monthly payment by $12.69. [For a standard 10-year repayment plan]
Source: Interest Rates and Fees for Federal Student Loans
Student loan debt by credential
The amount of student loan debt varies by the type degree being pursued – Associate, Bachelor’s, Master’s, Professional & Doctoral. A 2022 Texas Public Policy Foundation study analyses the student loan debt by credential.
Refer to the chart below for the Weighted Median College Student Loan Debt* at Graduation by credential for 2022.
Source: COLLEGE STUDENT LOAN DEBT: 2022
*All values mentioned are in 2021 US Dollars
How much do you have to pay for a 10-year standard repayment plan now?
Refer below the computation for interest rates for the standard 10-year repayment plan for students taking out loans in 23-24 (1 Jul’23 to 30 Jun’24) vs students taking out loans for years 24-25 (1 Jul’24 to 30 Jun’25).
Estimated impact of rising interest rates for Associate Degree Holders
For a median student loan debt of $14,160 for Associate degree holders
- The Total Interest for loans disbursed in the year 24-25 will increase to $5,160, up from $4,281 for loans disbursed in the year 23-24. A sharp increase of 20.54%
- The Monthly Payment for loans disbursed in the year 24-25 will increase to $161, up from $154 for loans disbursed in the year 23-24.
- The Total Payment over a 10 year period for loans disbursed in the year 24-25 will increase to $19,320, up from $18,441 for loans disbursed in the year 23-24.
Refer Table 1.1 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Associate degree holders.
| Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|
| 23-24 | 5.50% | $154 | $18,441 | $4,281 |
| 24-25 | 6.53% | $161 | $19,320 | $5,160 |
Estimated impact of rising interest rates for Bachelor Degrees Holders
For a median student loan debt of $23,796 for Bachelor degree holders
- The Total Interest for loans disbursed in the year 24-25 will increase to $8,671, up from $7,194 for loans disbursed in the year 23-24. A sharp increase of 20.54%
- The Monthly Payment for loans disbursed in the year 24-25 will increase to $271, up from $258 for loans disbursed in the year 23-24.
- The Total Payment for loans disbursed in the year 24-25 will increase to $32,467, up from $30,990 for loans disbursed in the year 23-24.
Refer Table 1.2 below for comparison of loan repayment amounts for 23-24 vs 24-25 for bachelor’s degree holders.
| Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|
| 23-24 | 5.50% | $258 | $30,990 | $7,194 |
| 24-25 | 6.53% | $271 | $32,467 | $8,671 |
Estimated impact of rising interest rates for Master’s Degrees Holders
For a median student loan debt of $42,903 for Master’s degree holders
- The Total Interest for loans disbursed in the year 24-25 will increase to $19,779, up from $17,007 for loans disbursed in the year 23-24. A sharp increase of 16.30%
- The Monthly Payment for loans disbursed in the year 24-25 will increase to $522, up from $499 for loans disbursed in the year 23-24.
- The Total Payment for loans disbursed in the year 24-25 will increase to $62,682, up from $59,910 for loans disbursed in 23-24.
Refer Table 1.3 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Master’s degree holders.
| Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|
| 23-24 | 7.05% | $499 | $59,910 | $17,007 |
| 24-25 | 8.08% | $522 | $62,682 | $19,779 |
Estimated impact of rising interest rates for Professional Degrees Holders
For a median student loan debt of $168,277 for Professional degree holders
- The Total Interest for loans disbursed in the year 24-25 will increase to $77,577, up from $66,704 for loans disbursed in the year 23-24. A sharp increase of 16.30%
- The Monthly Payment for loans disbursed in the year 24-25 will increase to $2,049, up from $1,958 for loans disbursed in 23-24.
- The Total Payment for loans disbursed in the year 24-25 will increase to $245,854, up from $234,981 for loans disbursed in the 23-24.
Refer Table 1.4 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Professional degree holders.
| Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|
| 23-24 | 7.05% | $1958 | $234,981 | $66,704 |
| 24-25 | 8.08% | $2049 | $245,854 | $77,577 |
Estimated impact of rising interest rates for Doctoral Degree Holders
For a median student loan debt of $81,072 for Doctoral degree holders
- The Total Interest for loans disbursed in the year 24-25 will increase to $37,375, up from $32,137 for loans disbursed in the year 23-24. A sharp increase of 16.30%
- The monthly payment for loans disbursed in the year 24-25 will increase to $987, up from $943 for loans disbursed in the year 23-24.
- The Total payment for loans disbursed in the 24-25 year will increase to $118,447, up from $113,209 for loans disbursed in the year 23-24.
Refer Table 1.5 below for comparison of loan repayment amounts for 23-24 vs 24-25 for Doctoral degree holders.
| Year | Fixed Interest Rate | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|
| 23-24 | 7.05% | $943 | $113,209 | $32,137 |
| 24-25 | 8.08% | $987 | $118,447 | $37,375 |
Impact of rising interest rate on time to repay the loan
Let’s examine how rising interest rates impact the loan repayment duration, influenced by loan type and monthly payments based on student credentials.
Time to repay loan for Associate Degree Holders
Median Student loan Debt: $14,160
Change in Interest rate: From 5.50% in 23-24 to 6.53% in 24-25
- For a $300 monthly payment: The time to repay the loan increases slightly from 4 years and 5 months (23-24) to 4 years and 7 months (24-25).
- For a $600 monthly payment: The time to repay the loan also increases slightly from 2 years and 1 month (23-24) to 2 years and 2 months (24-25).
| Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |
| Fixed Interest Rate | 5.50% | 6.53% |
| Monthly Payment $300 | 4 years and 5 months | 4 years and 7 months |
| Monthly Payment $600 | 2 years and 1 month | 2 years and 2 months |
Bachelor’s Degree
Median Student loan Debt: $23,796
Change in Interest rate: From 5.50% in 23-24 to 6.53% in 24-25
- With a $300 monthly payment, the time to repay the loan increases slightly from 8 years and 3 months (23-24) to 8 years and 8 months (24-25).
- With a $600 monthly payment, the time to repay the loan also increases slightly from 3 years and 8 months years (23-24) to 3 years and 9 months (24-25).
| Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |
| Fixed Interest Rate | 5.50% | 6.53% |
| Monthly Payment $300 | 8 years and 3 months | 8 years and 8 months |
| Monthly Payment $600 | 3 years and 8 months | 3 years and 9 months |
Master’s Degree
Median Student loan Debt: $42,903
Change in Interest rate: From 7.05% in 23-24 to 8.08% in 24-25
- With a $300 monthly payment, the time to repay the loan increases slightly from 26 years and 1 month (23-24) to 40 years and 11 months (24-25).
- With a $600 monthly payment, the time to repay the loan also increases slightly from 7 years and 9 months (23-24) to 8 years and 2 months (24-25).
| Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |
| Fixed Interest Rate | 7.05% | 8.08% |
| Monthly Payment $300 | 26 years and 1 month | 40 years and 11 months |
| Monthly Payment $600 | 7 years and 9 months | 8 years and 2 months |
Professional Degree
Median Student loan Debt: $168,277
Change in Interest rate: From 7.05% in 23-24 to 8.08% in 24-25
- With a $1500 monthly payment, the time to repay the loan also increases slightly from 15 years and 4 months (23-24) to 17 years and 6 months (24-25).
- With a $2500 monthly payment, the time to repay the loan increases slightly from 7 years and 2 months (23-24) to 7 years and 6 months (24-25).
| Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |
| Fixed Interest Rate | 7.05% | 8.08% |
| Monthly Payment $1500 | 15 years and 4 months | 17 years and 6 months |
| Monthly Payment $2500 | 7 years and 2 months | 7 years and 6 months |
Doctoral Degree
Median Student loan Debt: $81,072
Change in Interest rate: From 7.05% in 23-24 to 8.08% in 24-25
- With a $1000 monthly payment, the time to repay the loan increases slightly from 9 years and 2 months (23-24) to 9 years and 10 months (24-25).
- With a $1500 monthly payment, the time to repay the loan also increases slightly from 5 years and 5 months (23-24) to 5 years and 7 months(24-25).
| Time to Repay Loan 23-24 | Time to Replay Loan 24-25 | |
| Fixed Interest Rate | 7.05% | 8.08% |
| Monthly Payment $1000 | 9 years and 2 months | 9 years and 10 months |
| Monthly Payment $1500 | 5 years and 5 months | 5 years and 7 months |
Average student loan debt over the years
Americans owe $1.75 Trillion in student loan debt as of the first quarter of 2024, while the number was $1.18 Trillion in the first quarter of 2014.
- The average of student loan debt at Graduation has been $40,140 ( in May 2024 US Dollars) for the past 12 years.
- 3.3% -The latest year-on-year inflation rate before seasonal adjustment as of May 2024.
The year-wise trend for repayment* based on Debt per student at the Graduation level
| Year | Fixed Interest Rate | Debt in May 2024 Dollars1 | Monthly Payment | Total Payment | Total Interest |
|---|---|---|---|---|---|
| 2024 | 6.53% | $38,0662 | $433 | $51,938 | $13,872 |
| 2023 | 5.50% | $38,418 | $417 | $50,032 | $11,614 |
| 2022 | 4.99% | $39,765 | $422 | $50,589 | $10,824 |
| 2021 | 3.73% | $41,806 | $418 | $50,151 | $8,345 |
| 2020 | 2.75% | $44,020 | $420 | $50,400 | $6,380 |
| 2019 | 4.53% | $43,030 | $447 | $53,589 | $10,559 |
| 2018 | 5.05% | $41,939 | $446 | $53,502 | $11,563 |
| 2017 | 4.45% | $40,877 | $423 | $50,719 | $9,842 |
| 2016 | 3.76% | $39,735 | $398 | $47,734 | $7,999 |
| 2015 | 4.29% | $38,694 | $397 | $47,654 | $8,960 |
| 2014 | 4.66% | $37,132 | $388 | $46,524 | $9,392 |
| 2013 | 3.86% | $35,398 | $356 | $42,724 | $7,326 |
Source: Average Student Loan Debt by Year
1: Debt in May 2024 Dollars computed using Inflation Calculator
2: Projected based 2024 Q1 data Federal Reserve Board – Consumer Credit – G.19
*All are calculated in May 2024 dollars
- The Weighted Average Interest Rate for the past 12 years is 4.49% for Debt per student at Graduate
- The total interest to be paid for 2024-25 is 89.34% higher than the interest paid in 2013-14.
- On average, the Total Interest for a 10-year repayment plan at the graduation level has been $9,723 over the past 12 years.
- On average, the Monthly Payment for a 10-year repayment plan at the graduation level has been $414 over the past 12 years.
- On average, the Total Payment for a 10-year repayment plan at the graduation level has been $49,630 over the past 12 years.
Annexure
Median Debt by Credential
Interest rates for different degrees are taken as per Federal Student Aid 2024 data
For the calculations, the median student loan debt for 2022 is used. Source: Texas Public Policy Foundation 2022 report. Median debt by Credential as of 2022 as below:
| Credential | Median Debt |
|---|---|
| Associate Degree | $14,160 |
| Bachelor’s Degree | $23,796 |
| Master’s Degree | $42,903 |
| Professional Degree | $168,277 |
| Doctoral Degree | $81,072 |
Fixed Repayment Plans
All payments are computed for the standard 10-year repayment plan as per Federal Student Loan Repayment Plans.
| Fixed Plans | Standard Repayment Plan | Graduated Repayment Plan | Extended Repayment Plan |
|---|---|---|---|
| Eligibility | All borrowers | All borrowers | All borrowers, but federal direct loan and Federal Family Education Loan (FFEL) borrowers must owe more than $30,000 |
| Monthly Payment Amount | Payments are fixed to ensure loans are paid off within 10 years (10 to 30 years for Consolidation Loans) | Payments start low and increase every two years, ensuring loans are paid off within 10 years (10 to 30 years for Consolidation Loans) | Payments can be fixed or graduated, ensuring your loans are paid off within 25 years. |
Year-wise trend Debt per student at the Graduation
| Year | Debt per Student | Debt in May 2024 Dollars | Fixed Interest Rate |
|---|---|---|---|
| 2024 | $38,066 | $38,066 | 6.53% |
| 2023 | $37,650 | $38,418 | 5.50% |
| 2022 | $37,570 | $39,765 | 4.99% |
| 2021 | $37,110 | $41,806 | 3.73% |
| 2020 | $36,510 | $44,020 | 2.75% |
| 2019 | $35,210 | $43,030 | 4.53% |
| 2018 | $33,550 | $41,939 | 5.05% |
| 2017 | $32,090 | $40,877 | 4.45% |
| 2016 | $30,550 | $39,735 | 3.76% |
| 2015 | $29,140 | $38,694 | 4.29% |
| 2014 | $27,760 | $37,132 | 4.66% |
| 2013 | $26,270 | $35,398 | 3.86% |
Source: Average Student Loan Debt by Year
Total student loan debt and undergraduate enrollment rate over the years
| Year | Total Debt (in Millions) | Undergraduate Enrollment |
|---|---|---|
| 2024 | 1,751,735.86* | 16,144,761 |
| 2023 | 1,729,253.32 | 15,887,414 |
| 2022 | 1,764,067.41 | 15,870,262 |
| 2021 | 1,733,415.18 | 15,448,420 |
| 2020 | 1,693,860.24 | 15,884,559 |
| 2019 | 1,637,880.70 | 16,557,539 |
| 2018 | 1,566,903.43 | 16,616,370 |
| 2017 | 1,488,895.48 | 16,773,036 |
| 2016 | 1,405,332.16 | 16,874,649 |
| 2015 | 1,320,248.14 | 17,046,673 |
| 2014 | 1,235,751.47 | 17,294,136 |
| 2013 | 1,145,550.75 | 17,476,304 |
*Based on 2024 Q1 value
Source: Fast Facts: Enrollment (98), Federal Reserve Board – Consumer Credit – G.19
- Undergraduate enrollment has increased by 1.62% compared to last year.
- Enrollment was decreasing until 2021; since then, the average rate of increase has been 1.49%.
- The total student loan debt in America crossed 1.7 Trillion in the year 2021 and 1.5 Trillion in the year 2018.
References
- Interest Rates and Fees for Federal Student Loans, federal Student Aid (Interest Rates and Fees for Federal Student Loans)
- College Student Loan Debt: 2022, Texas Public Policy Foundation (COLLEGE STUDENT LOAN DEBT: 2022)
- Average Student Loan Debt by Year, Education Data Initiative (Average Student Loan Debt by Year)
- Federal Student Loan Portfolio, Federal Student Aid (Federal Student Loan Portfolio)
- Federal Student Loan Repayment Plans, Federal Student Aid (Federal Student Loan Repayment Plans)
- Consumer Credit Outstanding, Board of Governors of the Federal Reserve System (Federal Reserve Board – Consumer Credit – G.19)
- National Center for Education Statistics – Undergraduate Enrollment (Fast Facts: Enrollment (98))
- Consumer Price Index – May 2024, Bureau of Labor Statistics (Consumer Price Index – May 2024)
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