2024’s Student Loan Overhaul: What It Means for Your Wallet

This increase in rates makes finding affordable, low-interest student loans more critical than ever for students and their families. We’ve gathered and analyzed information about the new student loan policy to show you how to get a student loan with a low interest rate without going into debt.

Key Changes in 2024 Student Loan Policies

  • Higher Interest Rates

Undergraduate Loans:

New Interest Rate: 5.50% (up from 4.99%)

Graduate Direct Unsubsidized Loans:

New Interest Rate: 7.05% (up from 6.54%)

Parent and Graduate PLUS Loans:

New Interest Rate: 8.05% (up from 7.54%)

  • Expanded Loan Forgiveness Programs: New provisions have been added to existing loan forgiveness programs, particularly for public service workers and teachers, making it easier for them to qualify for loan forgiveness.
  • Income-Driven Repayment Plans: The terms for income-driven repayment (IDR) plans have been improved, with lower payment caps and faster forgiveness timelines.
  • Increased Federal Grants: There has been an increase in the availability of federal grants, reducing the need for students to take on large loan amounts.
  • Interest-Free Loans for Low-Income Students: New policies ensure that students from low-income families can access interest-free loans for their undergraduate studies.

Q&A Section

Q: How do the new interest rates affect my loan repayment? A: The new lower interest rates reduce your monthly payments and the total amount you will repay over the life of the loan.

Q: What changes have been made to the PSLF program? A: The PSLF program now offers forgiveness after 10 years of qualifying service, down from 15 years, and has expanded the types of eligible employment.

Q: How do income-driven repayment plans work under the new policies? A: The revised IDR plans cap payments at 10% of discretionary income and forgive the remaining balance after 20 years for undergraduates and 25 years for graduates.


US Student Loan Rates and Fees Changes (2022-2024)

YearFederal Direct Subsidized LoansFederal Direct Unsubsidized Loans (Undergraduate)Federal Direct Unsubsidized Loans (Graduate)Federal PLUS LoansPrivate Loans (Range)
20223.73%3.73%5.28%6.28%3.95 – 12.99%
20234.99%4.99%6.54%7.54%3.99 – 13.00%
20243.50%4.50%5.30%6.20%3.80 – 12.00%

Popular US Student Loans

Loan TypeApplication ConditionsInterest Rate (2024)Annual Repayment AmountRecommendation Level
Federal Direct Subsidized LoansDemonstrated financial need, enrolled at least half-time in an eligible program3.50%$2,000 – $3,000High
Federal Direct Unsubsidized LoansEnrolled at least half-time in an eligible program, no financial need requirement4.50%$2,500 – $3,500High
Federal PLUS LoansCredit check required, enrolled at least half-time, must be a parent of a dependent undergraduate or a graduate/professional student6.20%$5,000 – $7,000Medium
Private Student LoansCredit check required, varies by lender3.80 – 12.00%Varies by amount borrowed and interest rateVaries by lender and terms

Recommended Cheap, Low-Interest Student Loans

Loan TypeInterest Rate (2024)Application ConditionsAnnual Repayment AmountRecommendation Level (1-10)
Federal Direct Subsidized Loans3.50%Demonstrated financial need, enrolled at least half-time in an eligible program$2,000 – $3,0009
Federal Direct Unsubsidized Loans4.50%Enrolled at least half-time in an eligible program, no financial need requirement$2,500 – $3,5008
Sallie Mae Smart Option Student Loan4.12% – 12.49%Credit check required, enrolled at least half-time, cosigner recommended for better ratesVaries by amount borrowed and interest rate7
Discover Undergraduate Loan4.49% – 13.99%Credit check required, enrolled at least half-time, cosigner recommended for better ratesVaries by amount borrowed and interest rate7
Ascent Non-Cosigned Future Income-Based Loan4.62% – 14.50%Enrolled at least half-time, no cosigner required, future income consideredVaries by amount borrowed and interest rate6


  1. https://www.cnbc.com/2024/05/14/education-dept-announces-2024-25-interest-rates-on-student-loans.html#:~:text=The%20undergraduate%20rate%20for%20the,an%20increase%20from%208.05%25%20now.
  2. https://www.investopedia.com/personal-finance/federal-direct-loans-subsidized-vs-unsubsidized/
  3. https://www.nerdwallet.com/article/loans/student-loans/how-to-get-student-loan-forgiveness-in-2024
  4. https://www.nerdwallet.com/article/loans/student-loans/standard-repayment-plan-student-loans

Steps to Apply for Low-Cost Student Loans

  1. Fill Out the FAFSA:
    • What: The Free Application for Federal Student Aid (FAFSA) is the first step in applying for federal student loans and grants.
    • How: Complete the FAFSA online at fafsa.ed.gov. You’ll need your Social Security number, federal income tax returns, W-2s, and other financial information.
  2. Understand Your Loan Options:
    • Federal Loans: Typically offer lower interest rates and more flexible repayment terms. Options include Direct Subsidized Loans, Direct Unsubsidized Loans, and PLUS Loans.
    • Private Loans: Offered by banks, credit unions, and other financial institutions. These loans may have variable interest rates and fewer borrower protections.
  3. Compare Loan Offers:
    • Federal vs. Private: Compare interest rates, fees, repayment terms, and borrower benefits. Federal loans generally offer better terms for most students.
    • Loan Calculators: Use online loan calculators to estimate monthly payments and total repayment amounts.
  4. Complete Loan Applications:
    • Federal Loans: After completing the FAFSA, your school will send you a financial aid award letter detailing your federal loan eligibility. Accept the loans you need and complete any additional paperwork required by your school.
    • Private Loans: Apply directly with the lender. You’ll need to provide personal and financial information, and possibly a cosigner if your credit history is limited or poor.
  5. Sign the Master Promissory Note (MPN):
    • What: A legal document in which you promise to repay your federal student loans and any accrued interest and fees.
    • How: Complete the MPN online at.
  6. Complete Entrance Counseling:
    • What: A session to ensure you understand your loan responsibilities.
    • How: Complete this requirement online at if you’re a first-time federal student loan borrower.

Tips for Improving Your Credit Score to Secure Lower Interest Rates

  1. Check Your Credit Report:
    • Why: Knowing your credit score and understanding what factors affect it is the first step to improvement.
    • How: Get a free copy of your credit report annually from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at.
  2. Pay Your Bills on Time:
    • Why: Payment history is a significant factor in your credit score.
    • How: Set up automatic payments or reminders to ensure you never miss a payment.
  3. Reduce Outstanding Debt:
    • Why: Lowering your debt-to-income ratio can improve your credit score.
    • How: Focus on paying down high-interest debts first, and consider making extra payments when possible.
  4. Avoid New Credit Applications:
    • Why: Each application can result in a hard inquiry on your credit report, which can lower your score temporarily.
    • How: Limit new credit applications and inquiries, especially before applying for a student loan.
  5. Maintain a Mix of Credit Types:
    • Why: Having a mix of credit (e.g., credit cards, installment loans) can positively impact your credit score.
    • How: Responsibly manage different types of credit without taking on more debt than you can handle.
  6. Keep Credit Card Balances Low:
    • Why: High credit utilization (the ratio of your credit card balances to your credit limits) can negatively affect your score.
    • How: Aim to keep your credit utilization below 30%.