Interest rates for the most common types of student loans went up by a substantial amount on July 1. The rates on the three most common types of Federal student loans increased by an average of 14% from the previous year. Pell Grant maximum amounts also increased, but by a much smaller amount.
The interest rate on Federal Student Loans for undergraduate students increased to 4.45% from 3.76%; loans for graduate students increased to 6.00% from 5.31%; and parents taking out loans for their children will pay 7.00%, up from 6.31%.
The rates changed July 1 and apply only to student loans taken between July 1, 2017 and June 30, 2018. Every July 1, the rates change, but loans are locked in at the interest rate in effect when they are taken.
Some good news to offset the increased interest rate on student loans is that the maximum amount of Pell Grants also increased on July 1. Pell Grants do not have to be repaid to the government. The maximum amount of the Pell Grant went to $5,920, up from $5,815 per year. For more information see our Pell Grants page.
Iraq and Afghanistan Service Grants
One often overlooked type of grant money is the Iraq Afghanistan Service Grant. You may be eligible to receive the Iraq and Afghanistan Service Grant if:
- you are not eligible for a Federal Pell Grant on the basis of your Expected Family Contribution but
- meet the remaining Federal Pell Grant eligibility requirements, and
- your parent or guardian was a member of the military and died as a result of military service performed in Iraq or Afghanistan after the events of 9/11, and
- you were under 24 years old or enrolled in college at least part-time at the time of your parent or guardian’s death.
The Iraq Afghanistan Service Grant is usually equal to the Pell Grant limits, which means it is $5,920 effective July 1 of this year. See our Iraq and Afghanistan Service Grant page for more details, including how to apply.
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