Student loans make up a nearly $1.7 trillion debt crisis. Fueled by the rising demand and rising costs of higher education, the average college student that borrows money finds themselves about $30,000 in student loan debt when they graduate. This number becomes significantly higher for graduate students, medical students, law students, or just about anyone studying a professional degree.
Student debt is already at astronomical levels and showing no signs of slowing down. But this isn’t where the problem lies. The problem is that many people are having trouble keeping up with their payments. Nearly a third of student loan borrowers can’t meet their student loan obligations. This financial burden holds millions of Americans back from buying homes and building intergenerational wealth.
Despite the severity of the student debt crisis, higher education is more important than ever before. Research by the Federal Reserve shows that despite the premium, a college degree has a significantly positive impact on lifetime earnings. One study found that college graduates on average earn about 80% more than people with only a high school diploma.
Are you struggling to pay off your student loan debt? Maybe you’re still contemplating your higher education and how much debt you should take on. Whichever situation you’re currently in, the more you know about student loans and student debt the better.
In this guide, we’ll go over the average time to pay off student loans as well as top strategies for paying them off fast. Scroll down to get started!
What is the Average Time to Pay Off Student Loan Debt?
One of the most pressing questions in the minds of young graduates is around the average time to pay off student loans. This is because the longer you’re in debt, the more interest accumulates. More debt also holds you back from developing savings and investing in your financial future.
The average time to pay off student loans varies for everyone. The most important factors that will influence your personal timeline include the amount of debt you have and your income level. However, on average, the typical repayment period for student loans is between 10 to 30 years.
Are Student Loans Ever Written Off?
Student loan forgiveness is a term that is often tossed around a lot more than it should be. So when are student loans written off? The reality is that this rarely happens. Still, there are some scenarios where you may qualify for student loan forgiveness, cancellation, or your loans being discharged.
For starters, it’s important to straighten out the terms. If you’re not able to meet your student loan obligations because of circumstances surrounding your employment, you may qualify for student forgiveness or cancellation. On the other hand, if you can’t make payments either because you’ve become permanently disabled, passed away, or your college has been closed, there’s a possibility your loans may be discharged.
Whether you have federal or private student loans play a major role in the possibility that your student loans will be written off. For instance, federal student loans are automatically discharged if the borrower passes away. There’s no chance that family members or the borrower’s estate will need to keep making payments. However, in the case of private student loans, this isn’t always the case. It’s not unheard of for parents or spouses to have to pay their deceased family member’s student loans even after they’re deceased.
For information about student loan forgiveness for federal debt, make sure to read up on the Federal Student Aid website. To learn whether your private student loans are eligible for forgiveness, you’ll need to get in contact with your lender to inquire about their policies.
Paying Off Your Student Loan Debt
Student loans are a financial burden that can take years to get rid of. This is a significant time frame and if it scares you, you’re not alone. Policymakers have long recognized student debt is a serious issue that needs to be addressed.
It’s easy to feel stuck that you have to wait for Washington D.C. officials to come up with a solution to solve the student debt crisis. But this couldn’t be farther from the truth. There are important steps you can take now that can help you manage your student debt and even pay it off faster. Take a look!
Explore Student Loan Forgiveness and Grants
Just because student loan forgiveness is rare, doesn’t mean it’s not unheard of. In any case, it’s worthwhile to double-check whether you qualify for any student loan forgiveness programs or similar grants.
Certain career fields, such as public sector jobs, may qualify for the Public Service Loan Forgiveness (PSLF) program. This program offers various resources to help relieve the burden of your student loan debt.
However, in order to qualify for the PSLF program, your student loans must be government-issued. That means they must be either Federal Direct, Direct Plus, or Direct Consolidation Loans. If you have private student loans, unfortunately, you won’t be eligible for assistance — unless your loans have been combined through a Direct Consolidation Loan.
Income-Driven Repayment Plans
There are also income-driven repayment plans that adjust your payments according to your paycheck. In some cases, enrolling in an income-driven repayment plan can also result in loan forgiveness. There are four main types of student debt income-driven repayment plans.
- Revised Pay As You Earn Repayment Plan (REPAYE Plan) – This payment plan is available to borrowers with a Federal Direct Loan. Under this program, your undergraduate student loans may qualify for forgiveness after 20 years.
- Pay As You Earn Repayment Plan (PAYE Plan) – This payment plan automatically deducts 10% of your discretionary spending towards your student loans. However, no more than what is typically due under a 10-year repayment plan will be deducted from your account.
- Income-Based Repayment Plan (IBR Plan) – This program is ideal for individuals with a high debt-to-income ratio that are struggling to pay back their Federal Direct Loans or Federal Family Education Loans. After 20 years, your remaining balance is forgiven.
- Income-Contingent Repayment Plan (ICR Plan) – This payment plan is available specifically for borrowers with Parent PLUS loans. You may qualify for forgiveness after 25 years.
You can read more about income-driven repayment plans and how to qualify on the Federal Student Aid website.
Negotiate With Your Student Loans Company
If you’ve borrowed money from a private lender to finance your education, your options for repayment plans and loan forgiveness are strikingly more limited than borrowers with government-issued loans. However, not all hope is lost. If you’re struggling to make payments on your student loans or you’re even on track towards defaulting — you may be able to negotiate a settlement.
Some lenders will allow you to settle your student loan debt if they can receive more money through a settlement — rather than you defaulting or having to go to court to sue you. You’d have to get in touch with your student loan company and explain the financial difficulties you’re facing. From there, you can propose to pay back an amount lower than what you owe.
Keep in mind that in exchange for a student loan settlement, your lender may require you to pay the agreed-upon amount all at once or through an installment plan. In either case, be prepared with enough cash to settle your debts.
Consolidating Your Student Loan Debt
If you’re juggling student loans, credit card debt, auto loans, or other forms of debt all at once, you could benefit from a consolidation loan. Consolidating your student loans could help you lower your payments, minimize fees, and might even get you a reduced interest rate.
There are two main methods of student loan consolidation. The first is through a Direct Consolidation Loan. This option is only available for federal loans and won’t lower your interest rate. It works by extending the amount of time you have to repay your loan — so in some cases, you might actually end up paying more interest over time.
If you have private loans, your primary option for student loan debt consolidation would be refinancing. In this case, you’d need to work with a private refinancing company. These lenders will likely look into your credit score and income level before offering you a refinancing option.
Working with a refinancing company gives you the possibility to qualify for lower interest rates than what you’re currently paying. However, keep in mind that private lenders won’t give you access to federal loan forgiveness programs.
Budgeting To Pay Your Student Loans
Budgeting can help you contribute more than your minimum required payment — allowing you to pay off your student loans faster.
To create a budget, you need to start by understanding how much money you’re bringing in and shelling out each week or month. You can keep track of your expenses by listing everything you buy in a journal or log. You could also download budget apps or mobile banking apps to track your spending.
You’re most likely going to have to work on cutting down your expenses as much as possible. This could mean forgoing entertainment or major purchases. It’s not fun, but getting out of debt usually requires you to live below your means. You especially want to avoid taking on credit card debt.
You may also want to consider extra employment opportunities. Have you ever looked into side-gigs? Whether it’s driving for a ride-share company, renting out extra space on Airbnb, selling your old clothes, or picking up freelance gigs — earning extra cash can help you pay off your student loans sooner. Don’t rule out asking your employer for a raise either!
What to Know About Paying Off Student Loans
Are you in the contemplation phase of your education and considering whether to take out student loans? While higher education is certainly more valuable than ever before, student loans are a major financial commitment.
Try to look into educational grants or scholarships as an alternative to borrowing. You might even want to consider completing your core courses at a smaller school to save money before transferring to a more expensive school. It’s also important to thoroughly evaluate the relevant job opportunities before you settle on a specific major.
It’s certainly worthwhile to explore high-paying careers that don’t require higher education. Realtors, plumpers, air-traffic controllers, as well as other professionals, are frequently employed without a 4-year degree. Finally, understand the difference between federal loans and private loans. Federal loans often come with more opportunities for loan forgiveness.
If you’re currently paying off your student loan debt, remember to stay motivated. While there’s no quick and easy solution to getting rid of your student loans, you can still make considerable progress. With a combination of patience, smart money moves, and taking the steps we’ve suggested you’re bound to rid yourself of student debt and embrace your financial future!