It’s no secret that college tuition costs continue to rise, making the average student loan payment larger and larger. In fact, according to the Federal Reserve Bank of New York, the average student loan debt is growing at a rate of 17% each year. This can be quite a burden for students who have limited income but are still required to make monthly payments on their loans while they’re in school.
A basic overview of student loans
Student loans are probably one of the most common sources of student debt. The average undergraduate graduate student will have an outstanding loan balance of $26,700 by the time they finish school ($28,000 for students who started school in later years). To pay back student loans, students might choose to start off with a low monthly payment or take advantage of income-driven repayment plans.
The average student loan payment is $5,700 a year. This amount starts to increase as the student’s income goes up, but it typically doesn’t reach $10,000 or more until the student graduates and can start earning a higher salary.
How to pay off student loans in a reasonable amount of time
Student loans can be overwhelming to pay off. It is important to create a plan of attack and keep up with payments in order to do it in a reasonable amount of time. The key is to set aside money each month for the loan you are working on paying off. This will ensure that you are not spending too much money on your other bills and living expenses.
The average student loan payment is $351. This is the amount that the average student will pay in interest during the course of their repayment. With a higher interest rate, this comes out to about $2,561 over 10 years. It may be tempting to defer your payments and have them accumulate even more but don’t do it! Student loans are really an investment in your future and you can make sure that you’re making good choices by paying off loans as quickly as possible.
The various payment options for your loan
There are a number of ways to repay your loan, and this can depend on the type of loan you took out. Most loans allow you to defer payments for up to 10 years, which means that if you pay your loan off before then you will be charged a lower interest rate. If you don’t want to get into the habit of making payments, many loans now offer an income-based repayment plan where as long as your income is above a certain threshold, you will never have to make a payment.
Many people are unaware of the option to cap their loan payments and pay it off sooner. With auto-pay, you can set your monthly payment amount to the minimum, which is $0 per month. Auto-pay is an excellent way to avoid getting into credit card debt and can help you out by not having to worry about forgetting what day your payment was due on or going over budget.
When is the best time to re-sign your loan?
The best time to re-sign your loan is when interest rates are at their lowest. If the interest rate is significantly low, you may be able to pay off your loan in less than five years.
Another option would be to re-sign your loan when an upcoming event such as a child’s graduation or a wedding is coming up.
With an average student loan payment of $350, not signing your loan until the total amount is due may be beneficial to you. Although in some cases it may make sense to wait until the final six months of the term before re-signing, this is not always a good idea. If you are struggling to make payments and are worried about a late fee, then waiting could save you stress.
Conclusion
The average student loan payment is $351 per month.
Most students graduate with student loan debt of $30,000 to $40,000. For many people, the monthly payment on these loans can be upwards of $500. In this blog post, I analyzed the life-cycle cost of different payments from 0% interest to a 10% interest rate over 48 years. The average student loan payment is not a sustainable option for most people and it’s important to consider other options that will help you pay off your debt faster.