Penguin Pick of the Month: Student Loan Time Will Vary
As a graduate of Penguin University, Charlie loves higher education. The classes, extracurriculars, and social events all bring back warm memories. But he also remembers nearly having a heart attack when his first student loan bill came in.
To help upcoming grads, Charlie dusted off his undergrad research skills to uncover the latest trends in collegiate debt. He learned that students likely underestimate how long it will take to pay off their loans and may not know all of their repayment options.
No time to read the full scoop?
Here are some quick tidbits to get you started:
- Student loan debt is very common: More than 40 percent of college attendees take on debt, with the average monthly payment coming in between $200-300.
- Millennials are optimistic: In general, they believe they will be student loan free before their 30th birthday. The generation before them (Gen X), expects to owe on their education up until age 45.
- Males are more optimistic than females: Men believe they will kiss their loan goodbye by age 26. Women, who typically take on more student debt, believe they will have the obligation until age 33.
- Reality begs to differ: Based on the average debt for the degree and the average earnings expected for holding the degree, a business major can expect to pay off their loans in 22 years. Education majors are expected to pay for a whopping 37 years.
- 10 years is the default: You’ll automatically be put into a 10-year repayment plan when you graduate.
- Income-driven repayment plans can help: If the payments are too high on the 10-year plan, you can opt for one of the few plans that are based on your income. You’ll have 20-25 years to pay off the debt and any remaining balance will be forgiven at the end of the term.
Bonus: Try this calculator to see which repayment plans could be a fit for your situation.
While student loans can be daunting, it’s important to face them head on and learn about all of your options. Armed with that knowledge, you’ll be able to slay that debt ASAP!
Tell Charlie: What are your favorite student loan repayment hacks?