The rates are set annually and are based on the 10-year Treasury note auction held every May. The increase isn’t a total surprise since the Federal Reserve has kept the nation’s benchmark interest rate at a 23-year high as it waits for inflation to cool.
The Biden admin has a new student loan repayment plan, known as SAVE (Saving on a Valuable Education), could make it easier for current and future borrowers to pay off their federal student loan debt, despite the interest rate hike.
Launched last year, the income-driven repayment plan can lower monthly bills for enrolled borrowers and reduce the amount they pay back over the lifetime of their loans.
Plus, unpaid interest will not accrue as long as the enrolled borrower makes a full monthly payment. That means that a borrower’s balance won’t increase even if the monthly payment doesn’t cover the monthly interest.
“Plus, unpaid interest will not accrue as long as the enrolled borrower makes a full monthly payment. That means that a borrower’s balance won’t increase even if the monthly payment doesn’t cover the monthly interest.“
I don’t find that unreasonable.