Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Published: May 13, 2021 4 min read
Photograph of students on the steps of the Columbia University Library

Interest rates on federal student loans are set to rise nearly a full percentage point later this year, increasing the price of borrowing to pay for college for current and incoming students.

The new rates, which are based on the results of a Treasury auction Wednesday, apply only to loans issued for the upcoming 2021-2022 academic year. Undergraduate student loans will carry a rate of 3.73%, up from 2.75% this year. Graduate students have two types of loan they can use: unsubsidized direct loans, which will carry an interest rate of 5.28%, compared to 4.30% this year, and PLUS loans, which will rise to 6.28%, from 5.30%. Parents borrowing for their kids' college costs will also pay 6.28%. The new interest rates go into effect on July 1.