Student Loan Deal Reached: Loan Rates Now Tied to the 10 Year T-Bill Just in Time for the Rates to Rise

Well it seems that college kids with student loans are now at the mercy of higher interest rates going forward.

According to Inside Higher Ed, undergraduates will pay interest equal to the yield on 10-year Treasury notes, plus 1.8 percent. For grad school loans, it will be the T-Bill plus 3.8 percent, and for parent loans the government will add 4.5 percent. Rates will be fixed for the life of the loans, and capped for 8.25 percent for undergraduates, and 9.25 percent for grad students. 

As soon as the FED stops the low interest rate shenanigans and funny money printing these rates will jump to the highest percentages before too long. In other words the FED chairman will directly affect the borrowing cost of millions of college kids. Hopefully, when the economy is booming again and interest rates need to be hiked these kids will have decent jobs to pay off this increased debt burden.