Current Student Loan Interest Rates: Following Trends

The current student loan interest rates available for students and parents are based on the prevailing interest rates such as the 91-day Treasury bill or London Interbank Offered Rate (LIBOR). Following the trend in loan rates involves these steps.

Step 1: Obtain Historic Loan Rates

You can search for trends in student loan interest rates over a period of 1, 3, 5 and 10 years. These rates can be found for both private student loans and those student loans that are available for federal student loans.  For example, Stafford loan rates have gone from a low of 3.37 percent in 2004-05 to a maximum rate of 8.25% between 1995-98.

Step 2: Compare Loan Rates for Different Periods

Using the information found in Step 1, place the rates in a spreadsheet in order of year and type and compare the rates in order to determine the trends between the different student loan interest rates. You can benchmark these rates with inflation in order to see how close interest rates are to relative costs in the economy.

Step 3: Compare Loan Rates with Other Loans

This comparison should also be done between private and federal student loan rates. This will show you the difference between them.  Federal rates closely mirror changes in the treasury bill while private loan rates follow the LIBOR.

Following the trends for student loan interest rates gives you insight as to the availability of different rates and what your expectation may be to pay these loans when they are needed in order to finance a student’s higher education.


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