Federal Student Loan Rates for SY 2024-2025

Understanding Federal Student Loan Rates for 2024-2025

Federal student loan interest rates are determined annually based on the 10-year Treasury note auction results, plus a fixed margin. This approach ensures that the rates reflect the government's cost of borrowing, albeit with an added percentage to cover administrative costs and mitigate risk. The rates are fixed for the life of the loan, providing predictability for borrowers. Each year, the new rates take effect on July 1 and apply only to loans disbursed for the upcoming academic year, not affecting the rates of existing loans.

Uptick in Student Loan Rates

For the academic year 2024-2025, we're seeing a significant update to the interest rates on federal student loans. Here's a breakdown of what's coming:

• Undergraduate Federal Direct Stafford Loans will now carry an interest rate of 6.533%, a leap from the previous 5.5%.

• Graduate Federal Direct Stafford Loans see an increase to 8.083%, up from 7.05%.

• Parent PLUS and Grad PLUS Loans will be set at 9.083%, which is higher than the former rate of 8.05%.

The increase in federal student loan interest rates for the 2024-2025 academic year will inevitably compound the financial strain on students and families already navigating the challenges of higher education costs. With rates climbing across all loan categories, borrowers will face higher monthly repayments and an increased total cost of borrowing over the lifetime of their loans. This uptick could deter prospective students from enrolling in higher education programs, exacerbate the debt burden on graduates, and potentially influence career choices as individuals may prioritize high-paying roles to manage their loan repayments.

Comparing with Alternative Loan Options

A.M. Money Loans and other Private

A.M. Money has its rates currently set at 7.95%, with the Annual Percentage Rate (APR) ranging from 8.34% to 8.87% depending on the situation of the student. We're able to do this through our partnership with the McCormick Foundation, and the Chicago Community Trust.

However, our reach and capacity is limited and other private loan options are unlikely to have comparable rates. As such, its important to find the best rate you possibly can if you are looking at private student loans as a viable option for your higher education.

Federal loans, even with the newly adjusted rates, bring a suite of advantages that are not typically matched by private lenders. For instance, students benefit from features such as subsidized interest while enrolled in school, a grace period post-graduation, and access to a variety of repayment plans tailored to fit different financial situations, including income-driven repayment plans.

Why Federal Loans Remain a Strong Choice

Despite the uptick in interest rates, federal student loans retain their appeal due to several key factors:

Subsidized Interest

For eligible undergraduate students, the government covers interest charges while you're in school and during other specified periods. This feature can significantly lower the overall cost of your loan.

Flexible Repayment Options

The federal system offers multiple repayment plans, ensuring you can find one that aligns with your financial capability. Income-driven repayment plans adjust your monthly payments based on your income and family size, potentially leading to more manageable monthly expenses.

Potential for Forgiveness

Under certain conditions, such as public service work or qualifying repayment plans, borrowers may have their remaining loan balance forgiven. This opportunity is generally not available with private loans.

Navigating the Changes

Understanding these rate changes and their implications is the first step in effective financial planning for education. While the increases might seem overwhelming, the overarching benefits of federal student loans — including protection and flexibility rarely matched by private loans — maintain their value for students and families navigating the complexities of funding higher education.

Seeking Guidance

It’s advisable for students, parents, and advisors to explore all available information and resources when crafting a financial strategy for college. Guidance counselors and financial aid advisors can offer personalized advice that considers an individual’s or family’s unique situation.

Conclusion

The increase in federal student loan rates for the 2024-2025 academic year underscores the importance of informed financial planning. Despite higher rates, the intrinsic benefits of federal loans, such as subsidized interest, flexible repayment options, and the potential for forgiveness, uphold their fundamental advantage. By understanding these changes and consulting with financial advisors, students and families can devise a plan that ensures educational aspirations are supported by a sound financial strategy.

For those navigating the complexities of student loans and financial planning for education, remember you are not alone. Resources and advisors are available to guide you through these changes, assisting you in making decisions that best suit your financial and educational goals.

COVID-19 REFLECTIONS: Quarantine Time - Finding Your Vibe

As the days continue to go by and more information is being put on the news, it’s more than safe to say that a lot of us are feeling the quarantine blues AKA cabin fever. There’s something about just being in the house and not being allowed to gather that bothers some of us, because if I’m speaking for all the teens and young adults out there, I know we can all agree that we’re ready to break out. However, it’s absolutely necessary to take these precautions in order to keep everyone safe and healthy. 

Just because we’re confined in the house, doesn’t mean we can’t switch it up on a day-to-day basis and have some fun. I think a lot of people are overlooking this time in the confinement of our own homes. We should be enjoying our families and getting to know them more and get closer to them. We should also be discovering ourselves and working hard to make sure that we continue to strive and thrive. I know that’s a little optimistic, but I have a few suggestions to make your time a little more valuable, and a little more fun. 

Tip #1: Rediscover an old passion of yours 

Sometimes we take for granted our many talents, and when we get a little busier, we start to disconnect from that part of ourselves. The first way we can look at quarantine is that it’s giving us a way to redefine and relive what we fell in love with and why we fell in love with it. I know for me, I rediscovered my love for writing. I’ve always been a writer, and I actually have been writing since I was in the fourth grade. I lost track of it because of school and work and I started making up all these excuses why I wasn’t putting my energy in my passion, but then I realized my passion is who I am. I’m a writer, I’m a poet, I’m a novelist and I’m rediscovering what all those titles mean to me.

Tip #2: Family Fun Nights 

I’m really big on family, and I try to make sure that I’m bonding with every one of those family members that I hold close to my heart in some way. Sometimes you have to have those laughs and those moments of pure silliness in order to make yourself comfortable with where you are. Sometimes have a game night every now and then. I know for me and my family when I break out the Monopoly or a quick game of spades, it’s over with. My older brother even taught me how to play dominos so now I’m into that too. Try learning new things from your family that they enjoy so you can all enjoy different things together. 

Tip #3: Pushin’ for some cookin’ 

It’s safe to say that everyone has joined the home cooking train these days, especially since restaurants are closing and most of us are trying to refrain from going out too many times throughout each day. I love mixing it up in the kitchen. It’s soothing to me, especially when I’m cooking and I’m having my music going whether it’s my gospel or my old school R&B. You just have to find your niche, and even if you’ve never touched a pot or pan in your life, just try it. I feel like this quarantine is making us all a little braver as well, so start pushing those fears aside and let’s get those aprons! 

Don’t keep any of these things up just for the quarantine. I feel like now that people are starting these self-discovery journeys and getting back to the true essence of themselves, I feel like all of these things including the tips that I just provided for you should be practiced once we’re all in the clear to start getting back to the ways of the world. Don’t just talk the talk for the quarantine, walk the walk once you get out that door. Let’s do this!

Faith Smith, Valparaiso University ‘22

COVID-19 REFLECTIONS: Pick your "hard"

The biggest test students are about to face yet: Survival of COVID-19®. We students have more room to fail right now and that’s not even including actual course work difficulties. What odds are we up against? Well, they are still rather 50/50 despite it feeling otherwise. I say this because of a quote I’ve read recently, “Struggling is hard. Achieving your goals is hard. Pick your hard”. That there sounds very “50/50” to me. 

The betacoronavirus disease, COVID-19 for short, is a virus that is affecting the respiratory system of its victims and possibly killing them, which is becoming more frequent that we care to acknowledge. It has turned into a pandemic that is surely bringing fear and uncertainty across the world. The virus is a huge concern but for those of us who have not contracted it, it’s the precautions that are taking the biggest toll on us. This is where student troubles come in at. 

When this all started a lot of colleges were on spring break and then abruptly told that classes would not be resuming just yet for our safety. Social distancing has caused universities to cease all gatherings and in-person contact. Subsequently, some students living on campus have been displaced and a great majority of them have made their courses for the semester online. For some, this is exactly what they needed to be more successful. For others, this is a nightmare.

I personally have never signed up for an online class because I do not possess the discipline to stay on task and manage my time if there are no in-person meetings. I am also way too inquisitive of an individual to be comfortable being limited to how intimate my class setting may be; there is truly something prized about raising your hand for impulsive questions versus typing a laundry list of questions in an email and its follow up questions. This rings true for my peers across the world. Focus and discipline are issues for us in this time. 

With classes being virtual (video) via “zoom”, we have an abundance of time on our hands. Online courses affect our time management, engagement/ motivation, eating/ sleeping habits, productivity, graduation dates and mental health to name a few. With virtual lectures being optional for some, “optional” doesn’t take a high priority in such a time- students are missing lectures. What isn’t optional here are the assignments and if you aren’t good at managing your time and keeping up with dates, then points and grades can easily slip away from students. The motivation to keep up with online classes is at an all-time low as well. Some students’ busy schedules have calmed because of all this and they are taking the to time to care for themselves rather than keep class as a stressor for them. Due dates have moved farther away, and the urgency in their work ethic has been lost. A lot of students are classified as “physical’ or “social” learners. Taking away in-person meetings are affecting the amount of material that can be learned (and learned alone to make matters worse). Loss of routine has caused sleeping schedules to be broken and eating habits to be laxer than our heath can afford at this time.

Imagine being a displaced student and still have it expected of you to succeed during this pandemic for grades that will make or break your transcript.

Imagine losing your job because it is nonessential and being expected to give priority to coursework while not knowing if your landlord will pardon your rent or if you will have enough to feed your family. Imagine being the only one in the household with an essential job, having the weight of caring for yourself/family and still be expected to succeed this semester. Imagine not having a computer because you used one at the library every day and they are all closed now. Imagine fighting to live in the dorms for fear of home life and now you must return to a home that is unsafe or non conducive to your success. Imagine having too much time on your hands to fall into depression (or a deeper one) or self-harm. Imagine having too much time to think so you are sleeping to shut the noise off and subsequently declining your progress. Imagine having to drop out of courses and still expected to pay off your tuition bill. Imagine coming so close to graduating and it’s been pushed back a semester. Imagine catching this virus without healthcare and the medical bills still being expected to be paid or the lack of medical attention sought out for the same reason.

I could continue this rant, but we don’t have all day. The question is, now what? Even the government is fickle about what information is true or should be shared. I feel we may have more problems than solutions. There are a few tips for students I will suggest that I think are most important (without repeating everything that’s circulating). Nonetheless, now more than ever, it will be so much easier said than done. For starters, limit your consumption of the news about this pandemic.

This is not an ode to “ignorance is bliss” but a testament to “that was enough for now”.

Amongst that, take your classes and only work on one subject/course a day. Try not to do a bunch of different subjects a day because the jumping around will overwhelm you. Take one subject and work at your pace throughout the day or maybe even just the mornings. Which leads me to my next point, give yourself credit for all the steps you’re actively taking to make progress. That may be something as small as doing your hair really nice for yourself because looking better helps you feel better thus, improving motivation. Lastly, I would suggest getting due dates and tasks onto sticky notes as it helps when you can physically touch all those thoughts floating in your head. It’s also more satisfying to remove the stickies once something has been accomplished. 

What you are reading is my input into the time capsule. There are so many perspectives to look at this with: the elderly, the incarcerated, the undocumented, the healthcare workers, the homeless, etc. In the future when they ask what happened to us students during COVID-19, this will be one of many pieces they reflect on. 

Takira Brown, Roosevelt University ‘21

COVID-19 REFLECTIONS: Focusing At Home With Online Classes

Education is important. Don’t even get me wrong. But I’m sure by now all of you have been moved for the most part to online classes. I’m sure I can also be convinced that while you’re taking online classes, you’re at home. Of course with being at home, if you’re a college student like me, most likely you’re not in your own apartment. Instead, you’re at home with your parents and siblings if you have anything or any other relatives. Either way, most of you may be around people while you have to keep up with your classes. 

I know for me, my household can get crazy. With babies running in and out of here for me to babysit and then my parents or my sister can walk in at any given time while I’m online doing class virtually, it can be a hot mess. The distractions are at its all-time high. Even while I’m doing this blog, someone is trying to get me in conversation or my baby cousin is trying to play with me. It’s crazy, and I know it’s hard to keep up with the work, period. 

Some people may not have the proper internet access to attend the virtual classes nor to access their assignments through Blackboard. Trust me, I understand your pain and frustrations with this whole new setup. It’s a lot to take in and it was so sudden. I honestly dislike this new method of schooling. I feel like since everyone has to communicate via the Internet in some form of fashion, it’s harder to keep up with emails and assignment due dates. Professors already have their own households to worry about, and since they have multiple classes an abundance of students, their responses to emails are delayed which is also very understandable but frustrating at the same time because communication gets lacked. 

I also think it’s harder to attend these virtual classes because the Wi-Fi is unpredictable. Sometimes it runs slower because there’s so many people on it. Sometimes it cuts off and you miss certain aspects of the lecture. However, something that really helps with this is that all the professors are understanding. They make sure that the students are accommodated for so that if there is any trouble experienced, it won’t be held against us. 

I just wanted to open up a space for us to discuss this. Again, these are certainly uncertain times and it’s hard for us to understand what’s going on. Every time we turn on a news channel or look on social media, there’s a new announcement about extending the quarantine shutdown. It’s inevitable at this point, but once again we need to continue to stick together and make sure things run as smoothly as they can at this point. It’s a lot to take in, especially when it comes to school. My heart goes out to all the seniors out there this year, those both in high school and college, because senior year is one of the most important years of your life with both. Not just because you’re graduating, but also because of the festivities that everyone looks forward to. For high school, there’s homecoming, prom, and graduation itself and for college, it’s those alike. Times are still rolling, so we will continue, but trust and believe you’re not the only one feeling this. 

Faith Smith, Valparaiso University ‘22