Paying Off Student Loans: How Long Does It Really Take?

by | Sep 20, 2019

As the cost of a college education continues to soar, it’s important to know just how long it takes to pay off your student loan debt after graduation. After all, you don’t want to bite off more than you can chew and end up with too much debt and no reasonable timeline for paying it off.

Fortunately for you, there’s no need to start worrying about being saddled with a lifetime’s worth of student loan debt. Most student borrowers repay their loans in full within 19 years of graduation. However, many factors influence the student loan payoff process. In this guide, we’re going to get to the bottom of it – so you can get out of debt as quickly as possible.


How Long Does It Take to Pay Off Student Loans?

Research by the OneWisconsin Institute finds that the average American college graduate with a bachelor’s degree takes 20 years to repay their debts. 

We know two decades worth of debt sounds like a lot, but don’t panic. The length of your repayment period depends on the type of loan, the interest rate, the principal sum, and many more factors.


Federal Student Loan Repayments

There are two categories of federal student loan repayment plans: income-based plans and conventional plans. 

In the case of the former, borrowers are granted an extended period to repay their loan according to one’s income and loan balance. For the latter, a standard 10-year repayment schedule applies by default.

As you might’ve figured out by now, there’s no “one size fits all” loan repayment schedule. Here are the three main loan repayment plan varieties that fall into the “traditional” category:


  • Standard: The “standard” repayment plan is ten years. The principal borrowed determines how much money is owed every month. However, the minimum payments are $50 per month. Generally, monthly student loan payments equate to roughly one percent of the total outstanding balance under a standard plan. 
  • Extended: The “extended” repayment plan provides up to 30 years to repay the loan. However, the length of time afforded to the borrower depends on the size of the loan.
  • Borrowers are granted up to 30 years to pay off their federal student loans under a “graduated” repayment plan. However, these plans differ from extended plans in that they start at only a hair above interest-only payments and gradually increase in size every couple of years.

Income-Based Loan Repayments

The rising cost of education and the stagnancy of real wages has made student loan repayments difficult for millions of Americans. That’s why it’s becoming more common for borrowers to opt for an income-based loan repayment schedule. 

Income-based loan repayments allow students to pay a predetermined percentage of their discretionary income every month. But it’s more complicated than that.

Some income-fixed repayment plans consider your spouse’s income if you’re married, while some others don’t. Similarly, some plans have no limit on what you have to pay if your income level suddenly increases. Others will establish a cap, which is usually the standard 10-year loan payment limit.

The speed at which income-based loans are forgiven varies widely. Below, we’ve put together a list of the various income-based repayment options and their length until they’re forgiven.

  • Income-Based Repayment (IBR): Repayments are fixed to 15 percent of the student’s discretionary income, and all monthly payments are capped at the typical 10-year amount. Income also includes a spouse’s income if the borrower’s tax filing status is “joint.” All remaining debt is forgiven after 25 years or 300 payments.
  • Pay-As-You-Earn (PAYE): Repayments are 10 percent of the borrower’s discretionary income, which are capped at the standard 10-year amount. If the borrower files their income taxes with their spouse, then their spouse’s income is included. All remaining debt is forgiven after 20 years or 240 payments.
  • Revised PAYE (REPAYE): Repayment is based on 10 percent of the borrower’s income, and included spousal income regardless of tax filing status. Any remaining debt is forgiven after 20 years for undergraduates or 25 years for graduate students.
  • Income-Contingent Repayment (ICR): Monthly payments are 20 percent of the borrower’s income, and payment amounts are not capped. Remaining debts are forgiven after 25 years or 300 payments.


The Bottom Line

Whew, that was a lot of information. 

The takeaway is that there are many kinds of federal student loans that each carry their own repayment term and forgiveness criteria. Of course, you should be mindful whenever you take out a student loan. Weigh your options and choose a repayment plan that suits your long-term interests.


Getting Rid of Your Student Loans

Repaying your student loans on time is no easy task, but it’s possible. Of course, the most effective strategy for paying off your student loans is to minimize the amount you borrow. To do this, consider applying for local and state-level grants, bursaries, and scholarships. Financial aid is available and can help cover some of the cost of your education.  


Public vs. Private Schools

On average, American students pay $400 monthly to repay their student loans. However, this figure can be dropped simply by choosing a public college over a private college or university. 

According to a recent study by CollegeBoard, the cost of a public four-year college education tripled between the years 1988 and 2018. At the same time, the sticker price of a private non-profit four-year school more than doubled, as did the cost of public two-year programs.

Although the cost of an education at a public four-year college is rapidly rising, it’s still the most economical option. For the 2018-2019 school year, the average tuition fees for full-time students was reportedly over $35,000 annually. However, this figure doesn’t include grants, scholarships, and tax benefits.

By contrast, in-state students at four-year schools pay a total of $10,320. Better yet, the sticker price drops to about $3,740 in tuition and fees after accounting for financial aid and scholarships. Clearly, choosing a public school can help save you money, bolster your debt-to-income ratio, and improve your credit score after graduating.

Find A Debt Repayment Strategy

Your first course of action is to find out how much you are going to owe. Then you need to find out how you can pay it back efficiently (i.e., paying as little in interest as possible!). A good starting place is Student Loan Hero. Here, student loan borrowers can calculate your total balance and find an effective repayment plan for minimizing their total debt burden.


Consolidate Your Student Loans

Federal loans often aren’t enough to cover the full cost of higher education. That’s why more and more students are seeking out private lenders for additional loans and lines of credit. However, juggling multiple public and private student loans can result in a financial mess.

If you have multiple student loans, reach out to your student loan servicers about student loan refinancing. By taking this option, you can bundle your loan debts into a single low-interest loan with more favorable loan terms. Therefore, you can think of refinancing as a “consolidation loan” that merges multiple private loans into one, more manageable debt.

Although an origination fee will apply to newly consolidated student loans, this hardly comes close to what you would pay in interest with multiple loans. So skip out on the extra payments and choose debt refinancing if you want to start paying off student loans fast.


Look into Loan Forgiveness

Having your federal student loan forgiven by having it expire after 20 or 25 years is usually an unwise move. Forgiving your student loan can make the outstanding loan balance be imposed on you through your income taxes, so it’s best to avoid that option.

However, the Public Service Loan Forgiveness (PSLF) program is aimed toward public servants who work for the US government. Under the PSLF, indebted federal employees can have the remaining balance of their loan forgiven if they make 120 monthly payments under a qualified repayment plan. 


Not All Programs Are Created Equal

Graduate and professional degrees, on average, cost a lot more than your standard four-year bachelor’s degree or associate’s diploma. Consider the price of your program before making any rash decisions that you’re unsure of. Below, we’ve listed the average annual price of various educational programs at public in-state schools in the United States.

  • Law school: $28,720
  • Dental school: $38,000
  • Medical school: $33,350
  • Master’s degree: $20,000

There’s a clear gap between the cost of the programs listed above. After your undergrad, consider the average debt burden associated with each professional degree. Know what you’re signing up for before making any commitments to a long-term professional program. 


Become Charlie’s Friend Today

Student loans don’t have to be a debt sentence! If you want to conquer your student loan debt and achieve financial freedom, sign up for HiCharlie today (don’t worry, it’s free). This way, you can get the inside scoop on money-saving tricks and strategies to help you get ahead. 


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