Student Loans in 2025-2025: Highest Interest Rates in 16 Years You Must Know
Federal student loans disbursed between July 1, 2025, and June 30, 2025, will carry the highest interest rates since 2008, reflecting rising Treasury yields amid inflation concerns.
Essential Insights on 2024-2025 Student Loan Interest Rates
- The U.S. Department of Education has set the steepest federal student loan interest rates since 2008 for the upcoming academic year.
- These increased rates apply exclusively to loans taken out during the 2024-2025 school year, starting July 1, 2024.
- Interest rates are linked to the 10-year Treasury yields, which have risen due to the Federal Reserve's efforts to curb inflation.
Borrowers taking federal student loans this year will face the highest borrowing costs in over a decade and a half.
On July 1, 2024, the Department of Education implemented the announced interest rate hikes affecting only new federal student loans disbursed within the 2024-2025 academic cycle.
These rates reflect the increase in 10-year Treasury yields driven by investor concerns over persistent inflation and the Federal Reserve's record-high benchmark interest rate hikes not seen in over 20 years. Additional interest is added based on the loan type by the Department of Education.
Despite rising borrowing costs, the Department of Education is introducing measures to ease repayment burdens. For example, the Saving on a Valuable Education (SAVE) plan now halves payments for enrolled borrowers, offering relief alongside these higher interest rates.
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