The May Treasury auction has taken place, which means that federal student loan interest rates for the coming school year have been set. And there’s good news: for the first time in three years, interest rates went down– by about half a percent. Keep in mind that federal student loan interest rates are fixed, meaning borrowers won’t see their costs go up should interest rates change in the future.

Here are the rates for loans taken out from July 1, 2019-June 30, 2020, and for comparative purposes, the rates for the current school year.

Loan Type 2019-2020 Interest Rate 2018-2019 Interest Rate
Direct Undergraduate 4.53% 5.05%
Graduate Direct 6.08% 6.60%
Parent or Grad PLUS Loan 7.08% 7.60%

How does that translate over time? A freshman starting in fall 2019 and borrowing the first-year maximum of $5,500 would save $1.50 per month and about $170 total on a 10-year repayment plan compared with someone who took out the same loan a year earlier. A parent taking out a $10,000 PLUS loan for the 2019-2020 school year would save just under $3 monthly, and over $200 in total interest, on a 10-year repayment plan.