Is Higher Education Still Worth It? Student Loan Interest Soars in 2024, Pushing a Generation into Debt

 For young people across the U.S. and Europe preparing to enter college or graduate school, 2024 has become an increasingly difficult year to navigate financially. As of July 1st, interest rates for U.S. federal student loans have surged to their highest point since the 2008 financial crisis, drawing growing concern from students, families, and policymakers. According to official data, interest rates for undergraduate federal student loans have risen to 6.53%—a nearly 19% jump from last year and a staggering 44% increase compared to five years ago. For graduate students and parent borrowers using Direct PLUS loans, the rate has skyrocketed past 9%, the highest since 2006. This steep rate hike means that new loans taken out in 2024 alone could generate over $3 billion in additional interest costs in the coming years, placing immense financial strain on millions of households.

Take, for instance, an undergraduate student expected to graduate in 2025. If that student borrows $7,500 for their final year, they will owe approximately $466 more in interest compared to a peer who borrowed the same amount just one year earlier. For graduate students, the increase is around $485. Parents borrowing on behalf of their children will see their loan costs climb by an additional $497. And that’s just for a single year of borrowing. Many students take out similar loans annually, meaning the real financial burden over a full degree program can be significantly higher. Upon graduation, these young adults face the dual challenge of covering rent, healthcare, and daily expenses—while also managing loan repayments that are rising faster than their income. This long-term debt can delay major life milestones such as buying a home, starting a family, or launching a business.

While the U.S. government offers income-driven repayment plans like the SAVE (Saving on A Valuable Education) program, which in theory allows borrowers to align monthly payments with their earnings, the reality is more complex. Many students are unaware of these options, encounter bureaucratic hurdles during the application process, or continue to struggle financially despite qualifying for adjusted payments. Emily, a recent graduate from Southern Methodist University in Texas, experienced this firsthand. After securing a job at a nonprofit earning just $42,000 annually, she applied for the SAVE plan, only to face long delays due to paperwork errors and system glitches. For several months, she was forced to make full payments at the original rate, which pushed her budget to the edge and damaged her credit score.

One of the defining characteristics of U.S. federal student loans is that interest rates are fixed annually by a formula established by Congress. Once a student takes out a loan, the rate is locked in for the life of the loan. This means a student who borrows in 2024 at a 6.53% rate cannot benefit from potentially lower rates in the future—even if market conditions improve. In contrast, borrowers from earlier years may still be repaying loans at much lower rates, resulting in drastically different repayment outcomes among peers. Students today are effectively trapped between two difficult choices: take out a federal loan with high interest but important protections, or opt for a lower-interest private loan and forgo those protections entirely.

Many students and families are tempted by the appeal of lower rates offered by private lenders, hoping to ease the burden in the short term. However, they often overlook the critical benefits that come with federal loans—like access to income-driven repayment plans, public service loan forgiveness, and flexible deferment options in times of hardship. Without these safeguards, borrowers face greater exposure to financial instability. Andrew, a medical student from California, took out a private student loan in 2020 with an initial rate of just 4.5%, significantly lower than the federal alternative at the time. But when he lost his job in 2023, he discovered he was ineligible for any deferment or relief programs. With no safety net, he quickly racked up late fees and ballooning interest, eventually filing a complaint with the Consumer Financial Protection Bureau (CFPB). “Looking back, I should’ve prioritized protections over the interest rate. I had no idea how quickly things could spiral,” he said.

Student loans were designed to serve as a bridge to educational opportunity. Today, they increasingly function as a long-term financial barrier. For many families, the cost of education has morphed into a decades-long burden. While much of Europe still offers more generous education subsidies, students in countries like the UK and the Netherlands are also feeling the effects of rising tuition and loan repayments. The crisis, in many ways, is becoming global.

This isn’t just about rising interest rates—it’s about a higher education financing system that has become structurally unsustainable. Tuition continues to rise. Financial literacy remains low. Loan terms are poorly understood. And many students lack access to transparent, consistent information. As a result, borrowers are often forced to make decisions without fully understanding their long-term implications. It’s time for policymakers, universities, and lenders to share the responsibility of creating a more equitable system. That means simplifying repayment plans, making terms more transparent, increasing borrower support, and addressing the root issue: the spiraling cost of higher education.

Until these deeper reforms take place, the promise that education can unlock a better future is fading for millions. What was once a gateway to opportunity is now, for many, a lifetime of debt—and a sobering question that echoes louder each year: Is higher education still worth it?