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Rising Interest Rates and What It Means for Your PA School Loans in 2018

PA School Loans Interest Rates

There’s no doubt that interest rates will be increasing in 2018. There has already been an increase this year and the predictions are that there will be at least two, and maybe three more increases by the end of the year.

I’m a PA, not an economist, so how interest rates works are confusing to me and probably am to you too. What I know is that as the economy improves the government can raise interest rates. However, if they raise them too fast it can cause the economy to decline.

Personally, what it means to me is that currently we have record low interest rates, making borrowing historically inexpensive. As interest rates increase, it makes it more expensive to borrow money. As explained here on credible.com, federal loans are locked, but for new borrowers the rates can change. This means that if you took out federal loans last year the price you’re paying for those is most likely less than what you’re going to be paying this upcoming school year.

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If you have any private loans, you might have chosen the option to have a variable rate, instead of a fixed rate, as variable rates are usually lower. The problem with having a variable rate is that when interest rates go up your rate will change and you’ll be paying more for your loan than you were before, and this could affect your budget as your payments go up.

“Graduate students relying on costlier federal direct loans for graduate students could soon be looking at interest rates approaching 7 percent. A grad student leaving school with $30,100 in undergraduate loans and another $46,000 in grad school debt could be looking at $25,260 in total interest costs, a $5,812 increase from 2016 rates.”

If you’re currently in school there is not much you can do. You can only take out government loans for the current school year, so the interest rate you get is what it is.

If have already graduated and have high interest rates on you student loans, or if you have variable rates then now is the time to refinance them. If you’re looking at public service student loan forgiveness, then consolidating all your loans now could be an option. No two person’s student loan situation is the same and you should do your research before committing to refinancing or consolidation your student loans.

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When you decide that refinancing your loans is the best option I recommend checking with multiple lenders to make sure you get your best rate. A good starting point is credible.com, as they will check multiple lenders for you to see what the best rate is.

If you do decide to refinance your loans through credible.com use this link and we both will be eligible for a referral reward.

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