As financial markets grapple with fast-moving developments, including emergency interest-rate cuts by the Federal Reserve and stimulus plans in Washington, borrowers could see interest rates on student loans decline dramatically, likely to record lows.

The rates on new federal student loans issued to undergraduates for the coming school year could fall by about 2.5 percentage points to an all-time low of just below 2%, according to Mark Kantrowitz, vice president of research at Savingforcollege.com. Interest rates for graduate…

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