For college-age children and their parents, the good news is that interest rates on federal student loans are tied to 10-year U.S. Treasury yields, which have been trending down this year – from 3.04% at the end of 2013 to 2.44% at the end of May.

The bad news is that these rates will rise by 0.8%, compared to the previous year, for loans issued from July 1, 2014 and June 30, 2015. The interest rate on Direct Loans for undergraduates (subsidized or unsubsidized) will increase from 3.86% to 4.66%. For Direct Unsubsidized Loans to graduate students, the rate will increase from 5.41% to 6.21%.

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