Mike Davies
December 2016

Fed Rate Hike and How It Affects Student Loans

The Federal Reserve has announced an increase in interest rates Wednesday, December 14th. This will be the first increase since December 2015.

The Federal Reserve has announced an increase in interest rates Wednesday, December 14th. It was a move that was expected after months of steady improvements in United States employment rates which signaled that the economy is strong enough to endure and sustain a hike. This will be the first increase since December 2015.

Rates affect everyone. On the most common level, they will affect prices you pay at the store and how quickly those prices rise. When it comes to student loans the rate hike could affect you too. In general, if you have a private loan with a variable rate you will see the interest go up. But 92.5% of loans are from the federal government and carry a fixed rate.

Currently, the federal student loan rate is determined by Congress. Rates are decided by a formula based on the auction of 10-year Treasuries each year for loans disbursed on July 1 through the following June 30.

So, what does this mean for your current loans? It most likely will mean nothing. But if you need to take out loans next year the rates could be much higher.

“When you look at what’s happened to long-term rates since the election, it might seem inevitable that rates on government student loans taken out after June 30, 2017, will be higher than they are today,” said Stephen Dash, CEO of Credible.com, an online marketplace for lenders that offer student loan refinancing.

“Most kids with student loans are not getting their dream job right out of school,” Heppler said. “They’re not even getting a very high paying job — they’re going to get a starting salary which at best is going to be maybe two-thirds of what they’re expecting.”

If you do decide to go to college and take out loans, there are always options out there to help the borrowers. Whether it’s from an employer offering student loan assistance or a company like Ameritech Financial looking to guide borrowers to loan forgiveness, there is help.

Options are available to help

Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Ameritech Financial to be their advocate. Click here to find out what options are available. Our services could help you get back on track.

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Mike Davies

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