Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. Continue to make monthly payments even if you've satisfied future payments, and you'll pay off your loan faster.
The time it takes to repay student loans typically ranges from 20 to 30 years, depending on factors such as the degree attained, the chosen repayment plan, and the borrower's financial situation. Standard repayment plans usually take about 10-30 years, while income-driven repayment plans can extend up to 25 years.
A $30,000 private student loan can cost approximately $159.51 per month to $737.38 per month, depending on your interest rate and the term you choose. But, you may be able to cut your cost by comparing your options, improving your credit score or getting a cosigner.
The monthly payment on a $70,000 student loan ranges from $742 to $6,285, depending on the APR and how long the loan lasts. For example, if you take out a $70,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $742.
Student Debt in Perspective
Among those who borrow, the average debt at graduation is $27,100 — or $6,775 for each year of a four-year degree at a public university. Among all public university graduates, including those who didn't borrow, the average debt at graduation is $16,300.
Your interest charges will be added to the amount you owe, causing your loan to grow over time. This can occur if you are in a deferment for an unsubsidized loan or if you have an income-based repayment (IBR) plan and your payments are not large enough to cover the monthly accruing interest.
You're not alone if you are still paying off your student loans from your college education years ago. In fact, many Americans are paying their student loans well into middle age. A 2019 study from New York Life found that the average age when people finally pay off their student loans for good is 45.
The fastest way to pay off student loans is to pay more than the minimum each month. The more you pay toward your loans, the less interest you'll owe — and the quicker the balance will disappear.
The average federal student loan debt is $37,853 per borrower. Outstanding private student loan debt totals $128.8 billion. The average student borrows over $30,000 to pursue a bachelor's degree.
Getting ahead of your student loan debt is generally a smart move. But, if it meansavoiding higher-interest debt or delaying an important financial goal, paying your student loans off ahead of schedule may not be worth it in the long run.
Paying off student loans early can benefit you financially, but it should typically come second to building your emergency fund and retirement savings. People with private student loans or without other debt tend to benefit more from paying off student loans early.
Let's say you have $200,000 in student loans at 6% interest on a 10-year repayment term. Your monthly payments would be $2,220. If you can manage an additional $200 a month, you could save a total of $7,796 while trimming a year off your repayment plan.
20% of U.S. adults report having paid off student loan debt. The 5-year annual average student loan debt growth rate is 15%. The average student loan debt growth rate outpaces rising tuition costs by 166.9%. In a single year, 31.5% of undergraduate students accepted federal loans.
On average, it takes about 10–20 years to pay off a student loan. But with the right strategy, you can pay off your loans way faster! (I'm about to blow your mind.) Exactly how long it will take you to pay off your student loans depends on your original loan balance, your repayment plan and how much you pay each month.
Student Debt vs Income by Age Groups
Among the age groups, adults between the ages of 18 and 29 are the most likely to have student loan debt. Meanwhile, adults between the ages of 35 and 49 years old on average owe the most student loan debt.
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
As of May 30, 2023, the average monthly payment for federal student loans was estimated to be about $500 per month when adjusted for inflation. However, the final number depends on the type of loan, loan amount, interest rates, and repayment plan.
For example, the interest on a $30,000, 36-month loan at 6% is $2,856. The same loan ($30,000 at 6%) paid back over 72 months would cost $5,797 in interest. Even small changes in your rate can impact how much total interest amount you pay overall.
Meanwhile, 1 million people had a federal student loan balance of more than $200,000, up from 600,000 individuals.
What is considered a lot of student loan debt? A lot of student loan debt is more than you can afford to repay after graduation. For many, this means having more than $70,000 – $100,000 in total student debt.
How student loans affect your credit score. Student loans are a type of installment loan, similar to a car loan, personal loan, or mortgage. They are part of your credit report, and can impact your payment history, length of your credit history and credit mix. Paying on time could help your score.
55% of students seeking a Bachelor's degree from a public 4-year college have student loan debt. 45% of students seeking a Bachelor's degree from a public 4-year college have no student loan debt. 4% of Bachelor's degree graduates who went to a public 4-year school owe over $60,000 in debt.