Interest rates on student loans will drop to the lowest rate in a decade for the 2016-2017 year

Great news for your students and their families! Student-interest rates are tied to the high yield rate of 10-year treasury notes. This year’s auction set those rates at 1.71 percent. This means that the rate on undergraduate Stafford loans will drop from 4.29 percent to 3.76 percent for the 2016-17 academic year. The rate for graduate Stafford loans will be 5.31 percent, a drop from 5.84 percent this year. The rate on PLUS loans, which allow parents to take out loans to pay for their children’s college education, also dropped — from 6.84 percent to 6.31 percent.

Those rates take effect July 1, and they’ll be fixed over the life of any loans that are taken out during the 2016-17 academic year. Federal student loan interest rates have been tied to the rates on 10-year Treasury notes since 2013 when Congress decided to have the loans reset every year based on market conditions.

This information was reported by Money here: