The FOMC (the Federal Open Market Committee, a.k.a “The Fed”) recently raised interest rates. This article details the effect this has on student loans. Specifically, we detail the potential effects on those who have already graduated as well as those still in school.
Those Who Have Already Graduated
The interest rate hike will affect those who have already graduated in two ways:
1- Those looking to refinance: If you are contemplating refinancing you should not wait. Especially since market “experts” predict rates will increase again. If you need help refinancing check out MyFIT Student Loan Refinance. If you have already refinanced your student loans but have been making payments for over a year you may want to check out refinancing again and see if you can get a lower rate.
2- Those with variable rate loans: If you have a variable rate loan, you’ve already seen the rates increase over the past year to year and a half and this trend looks like it may continue in the near future. You may want to look into refinancing into a fixed rate loan especially if you still have five plus years remaining to repay your student loans.
Those Who Are Still In School
The interest rate hike also affects those in school in two ways:
1- Student loan interest rates: rates for Federal student loans are determined each June and effective in July. Since “generic” interest rates have gone up since June 2017, one should expect the rates on new student loans taken out after June 2018 to go up (currently, rates are 6% and 7%). My best guess is the student loan rates will go up by approximately 0.5% in June 2018. If you still can, and know that you will need additional loans, you may want to max out how much you take out in student loans this quarter/semester (i.e. before June 2018) even if you don’t need the money. If you over barrow today, you can reduce how much you take out next quarter/semester when interest rates are higher.
2- Those with variable rate loans: Just like those who have already graduated, interest rates for those that have private variable rate loans will see a rate increase.
As always, if you need help developing and implementing a student loan plan let us know at FitBUX. Our Coaches are standing by and are ready to help.