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Federal student loan interest rates will drop

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Staff writer ▼ | May 12, 2016
After the Treasury Department’s auction of 10-year notes, interest rates for all three student loans operated by the federal government will drop about half a percentage point.
Student loans   The rate will be reset in July
Students borrowing for undergraduate studies will pay 3.76 percent versus 4.29 percent; graduate students will pay 5.84 percent versus 5.31 percent; and parents taking out loans for their children will pay 6.31 percent versus 6.84 percent.

The rate will be reset in July and will apply only to student loans taken out to cover the 2016-2017 school year.

How much a borrower saves with this year's lower rates depends on the type of federal loan they borrow, the amount of debt and length of repayment.

While the rates may increase again in the years to come, they can’t go above the set rates of 8.25 percent of undergraduate loans, 9.5 percent for graduate loans, and 10.5 percent for loans taken out by parents.