I have rented several apartments, own rental property, and own homes.
First, month to month is always higher than a lease. I would recommend that you also put in a 60 day notice if allowed in your state. Remind people that the deposit is NOT the last month’s rent. The deposit is returned after you make repairs to any damage (over normal wear and tear).
Secondly, you can charge whatever the market will bear. They probably want to go month-to-month because they are thinking about moving out. That’s fine. When they move out, you won’t have money for a month or two and might need to spend some money, but I would suggest that you then put the property up for rent for closer to the market value.
Remember the cost of repairs, taxes, wear and tear, cost of rehabbing a unit when people move, appliance replacement, and at least a 10% vacancy rate when you figure your costs. There are online sources to help you calculate costs and a reasonable rental rate without being unfair to tenants. If you are charging much under market you are essentially giving people money. That’s fine, but you could also give money to food banks, your college, or a domestic violence shelter- or your children or family members. Of course, there is nothing wrong with lowering the rent for someone if you are sympathetic to their plight.
Just start looking at this as a business- be generous to your tenants but it is essentially a business arrangement and you are not obligated to support them.