Student loan interest rates are going down

5 stunning stats about college debt
5 stunning stats about college debt

Great news: If you have to take out a student loan to pay for college this year, the interest rate will be lower than it was for the last three years.

Interest rates for federal student loans available to undergraduates will fall to 3.76% from 4.29%.

That could amount to savings of as much as $360 over the life of your loan.

Some college students don't fully grasp what borrowing money will mean for their financial future.

So let's try to put it in perspective. Say you borrow the maximum allowed in federal loans this year. For freshmen, that's $5,500 -- and unless you qualify for a subsidized loan, interest will start accruing the day you get the money.

By the time you graduate, you'll owe $6,375 -- or about $64 a month for 10 years -- for the money you borrowed for freshman year alone. If you borrow the same amount for the next three years, you'll owe roughly $24,150 when you graduate -- or $240 a month for 10 years.

Related: Too poor to pay for college, too rich for financial aid

There are a few different types of federal student loans, and they come with different interest rates. Here's the rundown.

Loans for undergraduates: 3.76% (down from 4.29%)

Loans for graduate students: 5.31% (down from 5.84%)

If students max out on how much they borrow and still need more money to cover tuition, parents can help them out by taking out a federal PLUS loan -- but those come with higher interest rates.

PLUS Loans for parents: 6.31% (down from 6.84%)

Interest rates on federal student loans are reassessed annually and are tied to the rate for the 10-year Treasury note. Rates on loans for undergrads have been cut nearly in half since the most recent high of 6.8% between 2006 and 2009.

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