Federal student loan interest rates drop for 2019-2020 school year

June 2, 2019

There is finally some good news for a change when it comes to college costs.

For the first time in three years, interest rates on federal student loans will drop for new borrowers for new loans made on or after July 1, 2019. Rates dropped over a half a percent from the previous year.

New federal student loan rates for 2019-2020

Undergrads – 4.53%
Graduate Students – 6.08%
Parent PLUS and Graduate PLUS – 7.08%

The rates are fixed for the life of the loan, meaning they do not apply to families who took out federal student loans in previous years.

Rates are reset each year and are tied to 10-year Treasury yields. Congress has set a limit that rates on undergrad loans can never go higher than 8.25%, graduate loans can’t exceed 9.5%, and parent loans are capped at 10.5%.