Lafayette, The (KADN) – Each May, federal student loans get a new fixed interest rate for the upcoming school year. This year, new student borrowers will see an increase that previous buyers have not seen.
Just two years ago, federal student loan borrowers saw the lowest interest rates ever on their loans, but this fall, rates for undergraduate borrowers will be almost double what they were during the 2020-21 school year.
Interest rates are expected to rise and likely be quite high for new borrowers entering the fall semester.
As federal student loan rates go up 4.99%, Xavier, a student at the University of Louisiana at Lafayette, says it’s ridiculous and will impact new borrowers. “It really adds extra stress, you have to worry about saving and worrying about how you’re going to pay back your loans and things like that, it’s just extra stress, really.”
According to Forbes, the rate will increase by 1.26 percentage points. This is a 34% increase in the interest rate for undergraduate student loans compared to last year.
Although he is currently a student and benefits from a fixed interest rate, Xavier believes the government should find another source of revenue to raise rather than inflate interest rates.
“By putting all these young people in debt, they are struggling to pay back all kinds of things, trying to start their lives. They don’t need extra loans to worry about all this. They should find another way,” said Xavier said.
“When I think of student loans, I think of increasing my debt.”
Kelvin Paul Drexler, a student at the University of Louisiana at Lafayette, thinks student loan interest rates could make newcomers think differently about college. “If you want more Americans, especially young Americans if you want them to come to college. You should do something about the loan problem and not necessarily make it worse.”
For incoming students, Drexler wants to remind them of one thing when it comes to loans. “If you take out a loan, always stay with the same lending company and never have more than one where you realize you’re borrowing too much money from two different places.”
Student borrowers in the United States owe nearly $1.75 trillion in federal and private student loan debt as of April 2022. With the rate of increase changing, it will only continue to increase.
There’s no shortage of student loan calculators to see how much you might have to pay in interest. You can click here or here.