For new undergraduate loans, the current federal interest rate is 6.53%, the highest of the last decade; the lowest was 2.75%. Federal loans are available to graduate and professional students with an interest rate of 8.08%; parents can borrow PLUS* loans at 9.08%.
However, our opinions are our own. See how we rate credit score services to help you make smart decisions with your money. Some experts say any loan above student loan or mortgage interest rates is high-interest debt, a range of about 2% to 6%.
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.
According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.
With the average 30-year fixed mortgage rate currently at 7.18% (and the average undergraduate federal student loan rate at a much lower 4.99%), that means you could consider any debt with an interest rate higher than 7.18% as high.
As of July 2024, the best interest rates on private student loans started just under 4% for fixed-rate loans and just above 5% for variable-rate loans. For federal student loans, rates in recent years have ranged from 2.75% to 5.50% for undergraduate borrowers.
As of March 2020, 45% of the outstanding federal education loan debt was held by the 10% of borrowers owing $80,000 or more. Student loan debt is the second largest debt, aside from a mortgage, in a household. 83% of borrowers have a loan balance of $50,000 or less.
With $50,000 in student loan debt, your monthly payments could be quite expensive. Depending on how much debt you have and your interest rate, your payments will likely be about $500 per month or more. Your potential savings from refinancing will vary based on your loan terms.
About half of students at four-year public universities finished their bachelor's degree* without any debt and 78 percent graduated with less than $30,000 in debt. Only 4 percent of public university graduates left with more than $60,000.
With a 30-year, $300,000 loan at a 6% interest rate, you'd pay $347,514.57 in total interest, and on a 15-year loan with the same rate, it'd be $155,682.69 — a whopping $191,831.88 less.
Creditors must reduce the interest rate on debts to 6% for liabilities incurred before you enter active duty. If the debt is a mortgage, the reduced rate extends for one year after active military service.
Overall, only 1% of all U.S. adults owed at least $100,000. Young college graduates with student loans are more likely than those without this kind of debt to say they struggle financially.
If you racked up $30,000 in student loan debt, you're right in line with typical numbers: the average student loan balance per borrower is $33,654. Compared to others who have six-figures worth of debt, that loan balance isn't too bad. However, your student loans can still be a significant burden.
Personal finance specialists often advise students to take on less student loan debt than the average starting salary of their desired career. If you stick to this guideline, specialists say, you should be able to repay your loans within ten years.
To make loan payments comfortably, you'll need to maintain a manageable debt-to-income ratio. For example, if your expected starting salary is $35,000 per year ($2,916 per month) a monthly student loan payment of 8 percent should be no more than $233.
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.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
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 can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
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.