Here’s the average student loan payment — and how to lower yours

The average student borrower pays $393 per month, according to the Federal Reserve. This includes borrowers on all repayment plans, but does not count those whose loans are in deferment or forbearance.

However, there is a big caveat to this number. For one thing, it’s an average of all student borrowers, from recent graduates to those still paying their student loans from decades ago. The average graduate’s student loan debt has increased significantly over the past few decades, and now stands at over $30,000. It is therefore fair to say that the average repayment of a student loan for a recent graduate is likely to be above the general average.

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It is also important to realize that this is only an average. It includes people who graduated with just a few thousand dollars in student loans and also includes people with professional and graduate degrees who have student loan tabs well into the six-figure range.

With that in mind, if your own student loan repayments are a bit too high for your comfort, there are several ways to lower your monthly obligation.

Options for reducing your student loan repayments

If your student loan repayments are a bit too high and you have federal student loans, there are three main ways you can reduce them: extended, phased, and income-driven repayment plans.

  • Extended repayment plans: Extended repayment plans are available for borrowers with more than $30,000 in federal student loans and, as the name suggests, they extend your repayment term from 10 years to 25 years, reducing the amount you’ll pay. each month. This is similar to the difference between a 15 and 30 year mortgage – the longer one has a lower monthly payment, but you’ll end up paying more interest over time.
  • Graduated payment plans: This is a 10-year repayment plan, but it’s also available with the extended repayment term I just mentioned. This plan has a payout that starts low but increases every two years. The idea is that it will keep your payouts low as you start out in your career and increase as your salary (hopefully) increases over time.
  • Income Oriented Repayment Plans: Last but not least, there are income-driven repayment plans. There are several varieties (see our guide to the four types of income-driven plans), but the basic idea is that these plans cap your student loan payment at a certain percentage of your discretionary income. Another key point is that, unlike extended and graduated plans, income-driven repayment plans are eligible for the Public Service Loan Relief Program (PSLF) and all have provisions that any remaining balance is forgiven. after 20 or 25 years.

It’s also worth mentioning that if you have private student loans, you may also have ways to lower your payments, but these can vary widely from lender to lender. For example, some offer a variety of repayment terms, but you’ll need to check with your lender to find out what particular options are available to you.

If your student loan repayments are too heavy, consider your options

Ultimately, if your student loan repayments are putting too much financial pressure on you, then it’s a good idea to consider your options. More than $211 billion of federal direct loans are currently on standard repayment plans, and those borrowers would almost certainly lower their payments by choosing one of the other repayment options I mentioned. Even if you’re already using one of the alternative payment methods, it’s worth comparing what your monthly payment would be with the other choices.

To be clear, if you can comfortably afford to make your student loan repayments, it’s not necessarily a good idea to change your repayment plan just to reduce your monthly obligation. The less you pay each month, the more you are likely to pay long-term interest. However, if your student loan payments are eating up too much of your salary, there are alternatives.

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