3.6 million parents held about $103 billion in outstanding student loans for their kids' educations as of 2021, according to the latest federal data, and the surging interest has kept many of them stuck in a cycle of repayment long after their kids graduated. Insider has previously reported on the burden PLUS loans can bring, especially for parents. Those loans allow a parent or graduate student to cover up to the full cost of attendance to finance their own - or their child's - education, and the borrowing is uncapped, meaning the borrower could take on much more debt than they could actually afford to pay off. When it comes to the PLUS loans, this increase is particularly notable given that interest rates on those loans have not been this high since 2006. So, if an undergraduate borrower took out a direct loan in 2022, the 4.99% interest rate that was set last year will be the same interest rate that borrower repays for the lifetime of that loan. Interest rates on federal student loans are fixed, meaning borrowers will keep the interest rate at the time the loan is taken out for the duration the loan is in repayment. Direct PLUS loans for parents and graduate or professional students: 8.05%, up from 7.54%.Direct unsubsidized loans for graduates and professionals: 7.05%, up from 6.54%. Direct subsidized and unsubsidized loans for undergraduates: 5.5%, up from 4.99%.Here's what the new rates will look like: As Politico reported, it's quite the surge, rising to the highest levels since at least 2013. On Wednesday, the Treasury Department's auction on ten-year notes - government securities to which federal student loan interest rates are tied - set in place the new rates on those loans for the 2023-2024 school year. It's about to get a lot more expensive to take out a student loan in the upcoming school year. Account icon An icon in the shape of a person's head and shoulders.
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