How long does it take to pay off student loans?

The average borrower takes decades to repay their loans

How long does it take to repay student loans?

The length of time it takes to repay student debt depends on education costs and your degree level – attending a more expensive school or pursuing graduate degrees comes with additional costs, meaning taking on more student loans. Typically, it takes longer to repay these higher balances.

Here are the average repayment durations for student loans by degree at public colleges:

Technical diploma: 4.1 years

Bachelor’s degree: 5.6 years

Master’s degree: 9 years

Doctorate: 13.5 years

Professional: 27.3 years

The repayment plan you choose for the loan and the amount due on the student loan will also impact the length of time to repay the debt. A shorter-term repayment plan will have higher monthly payments but repays the debt faster. Longer loan terms or income-driven repayment plans may lower your monthly payments but extend the time to repay the debt.

Note: In 2019, the average monthly student loan payment for borrowers who had repaid their loans was between $200 and $299.

How to repay student loans faster

Worried you’ll be repaying student debt forever? Worry no more – here are some steps you can take to pay off student loans faster.

Limit borrowing for student loans

The easiest way to pay off student loans faster is to take out smaller amounts in student loans. Before choosing a school, consider the cost of the university you plan to attend. In many cases, the cost difference between attending a public in-state college ($10,560 per year) and a private college ($37,650 per year) can significantly reduce your student loan burden.

Note: On average, it will take 7.25 years for a student earning an associate degree with an annual salary of $46,100 to repay $30,100 in student loans.

Keep your student loan debt within minimum limits while you’re still in college by getting a work-study job. Look for financial aid such as federal Pell grants or private scholarships to cover some of your college costs. Finally, pay the accrued interest on your student loans while you’re in school.

Pay as much as possible on student loans

Once you finish college and start repaying student loans, the math is pretty simple: Paying higher amounts each month is the best way to pay off student debt quickly. In the standard federal student loan repayment plan, monthly payments are set to pay off the student loan (plus interest) in 10 years. If you can afford those payments, it’s best to stick with this plan.

Note: Enrolling in an income-driven repayment plan may lower payments, for instance, but it will likely lengthen the repayment period and increase interest and total loan costs.

If you find yourself with some extra cash each month, consider making an additional payment on your loans. Just be sure to talk to your student loan servicer and ensure that the funds go toward the principal balance due, not the next payment or accrued interest.

Another great way to pay off student loans faster: create a monthly budget – and stick to it. If you cut discretionary spending like dining out, buying clothes, or traveling, you’ll have more money to put toward student loans.

Qualifying for loan forgiveness programs

If repaying student loans feels like an unrealistic goal, you might consider student loan forgiveness programs.

These programs range from public service student loan forgiveness to military student loan forgiveness options to repayment options offered by your employer.

Offers

Income-driven repayment plans, for example, allow for forgiveness on any remaining balance after you’ve made payments for 20 to 25 years.

Note: The American Rescue Plan Act of 2021 makes student loan forgiveness between 2021 and 2025 tax-free.

Or check out grants to help you pay off your private student loans. These programs do not require repayment and can help offset the cost of student loans for a variety of professions.

There are also volunteer-based programs for student loan forgiveness. For example, if you volunteer with certain branches of AmeriCorps, you may qualify for some student loan repayment benefits.

Review the eligibility requirements for these student loan forgiveness programs. Requirements may include qualifications like the field you work in, the number of student loan payments you need to make while in the program, and how timely your private loan payments are.

Conclusion

While it may sometimes feel like you’ll be in student debt for 20 years or more, it doesn’t have to be that way. By using strategies like choosing public colleges over private ones and exploring loan forgiveness programs, you can help offset the amount of long-term debt that will follow you through graduation – and trust us, every little bit helps.

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Sources:

EducationData.org. “Average Time to Repay Student Loans.”

Board of Governors of the Federal Reserve. “Report on the Economic Well-Being of U.S. Households in May 2020.”

Federal Reserve Bank of New York. “Quarterly Report on Household Debt & Credit 2020: Q4 (Released February 2021).”

Federal Student Aid. “Federal Student Loan Portfolio,” Download Federal Student Aid Portfolio Summary.

College Board. “Trends in College Pricing 2020: Highlights.”

Federal Student Aid. “Standard Plan.”

Federal Student Aid. “Income-Driven Plans Questions and Answers.”

Congress.gov. “The American Rescue Plan Act of 2021,” Page 182.

Source: https://www.thebalancemoney.com/how-long-does-it-take-to-pay-off-student-loans-4588027