Calvin College students on campus

College students will pay more in interest for student loans this fall after interest rates rose.

(File photo)

LANSING -- Interest rates on federal student loans went up July 1, but unlike last year, there won't be a rush to get them back down.

The rate on undergraduate Direct Loans is now 4.66 percent, while the rate for graduate Direct Loans is 6.21 percent and the rate for graduate PLUS loans is 7.21 percent.

The increases came about as a result of the agreement brokered in Congress last summer over student loans that indexed interest rates annually to the yield on 10-year Treasury bonds.

The Bipartisan Student Loan Certainty Act of 2013 cut interest rates for some borrowers last summer, but tied future loan increases to bond rates instead of requiring Congress to set the rates itself.

The rates apply to all loans issued between July 1, 2014 and June 30, 2015, but will not change the rates on loans already issued.

College costs have been a hot topic in recent months, with tuition increasing for another year at virtually all of Michigan's colleges and universities and some saying reliance on student loans is creating a "bubble" that could have serious effects on the economy.

An analysis by Vox suggests rates could continue to increase for borrowers in future years as bond rates continue to climb.

Brian Smith is the statewide education and courts reporter for MLive. Email him at bsmith11@mlive.com or follow him on Twitter or Facebook.