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Student-Loan Interest Rates Will Drop Again in 2016-17

Interest rates on new federal student loans will drop to their lowest level in a decade next year, Money reports.

The rate on undergraduate Stafford loans will drop from 4.29 percent to 3.76 percent for the 2016-17 academic year. The rate for graduate Stafford loans will be 5.31 percent, a drop from 5.84 percent this year. The rate on PLUS loans, which allow parents to take out loans to pay for their children’s college education, also dropped — from 6.84 percent to 6.31 percent.

Student-loan interest rates are tied to the high yield of the 10-year Treasury note. This year’s auction, which was held on Wednesday, set that yield at 1.71 percent.

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