Rising student loan interest rates, what will it mean for students

Published: Jul. 17, 2018 at 3:55 PM AKDT
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Going into effect this month, undergraduates who take out a loan with the federal government will see a 13 percent increase in interest rate compared to last year.

Abraham Boney, a student at the University of Alaska Anchorage, said he's working to avoid having to make student loan payments.

"I went through the loan system almost 10 years ago and I just got to the point where I can handle the bills," Boney said.

The current interest rate for an undergraduate taking out a student loan is 5.05 percent. Last school year the rate was 3.75 percent.

Shauna Grant, Financial Aid Associate Director at the University of Alaska Anchorage says about 60 percent of students at UAA use federal student loans.

"The good news is if you have existing students loans this increase does not affect them," Grant said." Students who refinance are obviously going to see a change in what their borrow benefits are."

Grant says it is important to borrow wisely and only borrow what you need.