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Private Student Loan Rates: May 20, 2025 – Loan Rates Move Up
- Rates on 10-year fixed-rate private student loans increased last week despite still offering relatively low rates for interested borrowers with a credit score of 720 or higher.
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- Last week saw a 1.10% increase in the average fixed rate on 10-year loans, reaching 8.51%, higher than the 7.41% the prior week and 0.37% higher than last year's rate.
- For a $20,000 loan at today's average fixed rate, monthly payments would be around $248 with total interest over 10 years amounting to approximately $9,769.
- Variable five-year student loan rates also rose to 9.89% from 7.68% the prior week, indicating a fluctuation in interest rates over the loan term.
- Consider your financial stability and repayment plans when choosing between fixed and variable interest rates, with variable rates potentially being beneficial for quicker payoff strategies.
- Private student loans are suitable when federal loans’ borrowing limits are reached or ineligibility arises, but always prioritize federal loans for lower rates and more repayment options.
- During the private loan application process, evaluate the overall cost, lender assistance options, credit history impact, and the importance of a qualified co-signer for individuals with limited credit history.
- Borrow responsibly by comparing total costs, considering lender support for payment difficulties, borrowing only what you need, and understanding how loans are disbursed and which expenses they cover.
- Maximize federal financial aid eligibility before opting for private student loans, which offer no annual borrowing limits, competitive interest rates, and may not require immediate payments during schooling or post-graduation.
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