Lafayette, The (KADN) – Each May, federal student loans receive a new fixed interest rate for the upcoming school year. This year, new student loan borrowers will see an increase that previous buyers haven’t seen.
Just two years ago, federal student loan borrowers saw the lowest interest rates on their loans, but this fall, rates for undergraduate borrowers will be nearly double what they were during the 2020-21 school year.
Interest rates are set to go up and will probably be quite a lot for new borrowers entering the fall semester.
With federal student loan rates rising by 4.99%, University of Louisiana at Lafayette student Xavier says it’s ridiculous and will affect new borrowers. “It really just adds extra stress like, you have to worry about saving and worrying about how you’re going to pay off your loans and things like that, it’s just added stress, really.”
According to Forbes, the rate will increase by 1.26 percentage points. That’s a 34% increase in the interest rate for undergraduate student loans compared to last year.
Although he is a current student and has a fixed interest rate, Xavier believes the government should find another revenue stream to raise interest rates instead of inflating them.
“By putting all these young people into debt, they are struggling to pay for all sorts of things, trying to start their lives. They don’t need the extra loans to worry about all that. They should find another way,” Xavier said.
“When I think of student loans, I think of an increase in my debt.”
For University of Louisiana at Lafayette student Kelvin Paul Drexler, he believes student loan interest rates could make newcomers think differently about going to college. “If you want more Americans, especially young Americans if you want them to go to college. You need to do something about the loan problem and not necessarily increase it.”
For incoming students, Drexler wants to remind you of one thing when it comes to loans. “If you apply for a loan, always stay with the same loan company and never have more than one until you realize you’re borrowing too much money from two different places.”
Student loan borrowers in the United States owe nearly $1.75 trillion in federal and private student loan debt as of April 2022. With the rate-up change, it will only continue to rise.