Students headed to college in the fall will pay less on their college debt

Rates for college loans decline

On the upside, students headed to college in the fall will pay less on their college debt.

Based on an earlier auction of 10-year Treasury notes, the interest rates on federal student loans taken out during the 2020-21 academic year are at an all-time low.

For those already struggling with outstanding debt, the CARES Act offered even more relief by pausing payments on federal student loans until the end of September.

Student borrowers with private loans can benefit as well.

Although federal loans are fixed, private loans may have a variable rate tied to Libor, prime or T-bill rates, which means that when the Fed holds rates down, those borrowers will likely pay less in interest, depending on the benchmark and the terms of the loan.