Use private student loans as a last resort. These are controlled by banking institutions and offer few flexible repayment plans. Banks may offer lower promotional interest rates, but these are contingent on excellent credit scores.
A subsidized loan is your best option. With these loans, the federal government pays the interest charges for you while you're in college.
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.
Private student loans are generally more expensive than federal student loans. The chart below provides a summary of the differences. Payments aren't due until after you graduate, leave school, or change your enrollment status to less than half-time.
Private student loans
These are loans offered by non-government institutions such as banks, credit unions and colleges. They're usually more expensive and less flexible when it comes to repayment, so they should be your last resort after exhausting all other options.
Pay Off High-Interest Loans First
With this approach, you pay off your loans from the highest interest rate to the lowest. You make the minimum payments on each balance except the highest-rate loan. You also make an extra monthly payment based on how much you can put toward the debt.
While $30,000 is about average for student debt, you can take steps to pay it off sooner than average.
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.
For most student borrowers, federal Direct loans are the better option. They almost always cost less and are easier to repay. (This may not be the case if you are a parent or graduate student considering federal PLUS loans, though.)
Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans. In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
If you're a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998, you'll be on repayment Plan 4. This means you'll pay 9% of the income you earn over the threshold to the Student Loan Company (SLC).
Federal student loans offer many benefits compared to other options you may consider when paying for college: The interest rate on federal student loans is fixed and usually lower than that on private loans—and much lower than that on a credit card!
Your Last Resort: Private Loans
These loans have different repayment options than federal loans and will most likely cost you more in interest. Also, they may not have the same kinds of protections in case of disability or death as do the federal loans. Private loans generally should be taken out only as a last resort.
Student loan delinquency and default
Default has serious financial consequences, including: Hurting your credit rating and your ability to buy a car or house or get a credit card. Having your tax refunds withheld and applied toward your defaulted loan. Having your wages garnished (withheld) to repay your loan.
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.
The average monthly student loan payment is an estimated $500 based on previously recorded average payments and median average salaries among college graduates. The average borrower takes 20 years to repay their student loan debt.
Monthly loan payments should be no more than 8-10 percent of expected gross monthly income.
On average, people with student loans have spent just over 21 years paying back their loans. Federal student loans offer repayment plans that last from 10 to 30 years. Private student loan repayment terms vary.
If you have federal student loans, they may be either subsidized or unsubsidized loans. It's typically best to focus on your unsubsidized loans first since they accrue interest during school and your grace period.
The type of loan that tends to be most difficult to get from a bank is a business loan. Banks typically have stricter requirements and higher standards when it comes to granting business loans. They often require a proven track record of financial stability, detailed business plans, and collateral to secure the loan.