The amount of time it takes for an individual to repay their student loan debt depends on the initial amount borrowed, the loan's interest rate, and repayment habits, among other factors.
Both federal and private student loans fall off your credit report about seven years after your last payment or date of default. You default after nine months of nonpayment for federal student loans, and you're not in deferment or forbearance.
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.
Meanwhile, 1 million people had a federal student loan balance of more than $200,000, up from 600,000 individuals.
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.
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.
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.
If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the national credit bureaus, which can negatively impact your credit rating. If you continue to be delinquent, you risk your loan going into default.
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., at least 10 years of payments. To benefit from PSLF, you need to repay your federal student loans under an IDR plan.
The Benefits of Fresh Start for Eligible Loans
Restores eligibility to receive federal student aid including Federal Pell Grants and work-study. Protects borrowers from wage garnishments and costly collection fees. Restores eligibility for future loan rehabilitation for borrowers who rehabilitated during the pause.
According to a recent Forbes Advisor and Talker Research survey of 2,000 adults, one in three respondents said they regret using student loans to finance their education and would not choose that route again if given the opportunity.
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.
Student loans add to your debt-to-income ratio
Student loans increase your DTI, which isn't ideal when applying for mortgages. Most mortgage lenders require your total DTI ratio, including your prospective mortgage payment, to be 45 percent or less, though it's possible to find lenders that will accept a higher DTI.
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
In some cases, it might even hurt your score. Borrowers who made student loan payments on time and who get the full amount of their loans forgiven could see a slight bump in their credit scores, according to Martin Lynch, director of education at Cambridge Credit Counseling.
Nearly eight in ten students graduate with less than $30,000 in debt. Among those who do borrow, the average debt at graduation is $27,100 — or $6,775 for each year of a four-year degree at a public university.
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.
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.
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.
According to Experian, average total consumer household debt in 2023 is $104,215. That's up 11% from 2020, when average total consumer debt was $92,727.
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.