The expected rate drop comes amid falling inflation and may bring lower borrowing costs for student loans.
The Federal Reserve is expected to cut its benchmark interest rate for the first time in four years when it meets Wednesday, prompting questions on how a drop could affect student loans.Interest rates have risen since 2020, climbing gradually as the Fed's benchmark federal funds rate went from 0 percent during the early pandemic to the current 5.25 to 5.5 percent range.
'Obviously, the interest rates on existing fixed-rate private student loans do not change, but borrowers can choose to refinance their loans to take advantage of lower prevailing interest rates or improvements in their credit scores—which can also lead to lower interest rates—or if they want to switch lenders,' Kantrowitz said.
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