Federal Student Loan Interest Rates: What to Expect During the 2018-19 academic year, federal student loan interest rates were set at 5.05% for undergraduate loans. Federal Direct Parent PLUS loans were at 7.6%, and Federal Direct Graduate PLUS loans were pegged at 6.6%. Federal student loan interest rates for the upcoming 2019-20 academic year will be decreasing to 4.53% for Federal Direct Subsidized and Unsubsidized loans for undergraduates. Federal Direct Parent PLUS loans will be set at 7.08%. Federal unsubsidized loans for graduate and professional students will decrease to 6.08% These lower interest rates are great news if you or someone who know will be attending college in the coming academic year and need to borrow loan funds. Currently, around 70% of students who are taking out student loans to attend college. Private Student Loan Interest Rates Private student loans are run by private lending institutions so they are not under these legislative actions the President is taking to give more students the ability to borrow a reasonable amount to attend college. Interest rates on private student loans can vary, depending on the lender. Other factors can also effect student loan rates including your personal credit score. There’s no need to worry, though, if you do not yet have a credit rating or if you have a credit rating that is lower than desired for a private student loan. You can get a cosigner to sign with you and it will usually help you to qualify for a private student loan. (Credit histories and scores are not a factor in determining your ability to borrow a Federal Direct Subsidized or Unsubsidized student loan). The Domino Effect Much of what happens in the political arena creates a “domino effect” in the financial world. The reduction in student loan interest rates should help students and parents to reduce the amount of interest they will pay on federal student loans. Do your own research and find out what is going on in the political world, because it may have a bigger impact on you than you might think!