With 45 million people currently carrying $ 1.7 trillion in student loans in the United States, student loan payments are an important monthly debt obligation for a growing percentage of the nation.
According to the Federal Reserve, the average payment for student loan borrowers is $ 222 per month. However, this doesn’t really reflect what people are actually paying each month, as 38% of respondents said at least one of their loans had been deferred (meaning they were currently not making any payments at all).
For borrowers who are actively paying back their student loans, the average monthly student loan rate is much higher. This article examines the average monthly student loan payment in the US and what you can do to manage your own student loan debt.
Special note during COVID-19: Currently, student loan payments are on hold for most borrowers. Find out here about your student loan options during the coronavirus pandemic.
The average monthly student loan payment in the United States
According to research by the Federal Reserve Bank of New York, the average monthly payment for a student loan is $ 393. They also found that 50% of student loan borrowers owed more than $ 17,000 on their student loan.
Below is a list of more notable student loan payment statistics from the Federal Reserve report:
- Average student loan debt: $ 32,731
- Median debt for student loans: $ 17,000
- Average monthly student loan payment: $ 393
- Average monthly student loan debt payment: $ 222
- Proportion of borrowers with increasing loan balances: 47.5%
- Percentage of borrowers who are more than 90 days in arrears: 4.67%
- Average debt burden for graduates in 2020: $ 30,120 (see here the average student debt by senior year)
Although hundreds of dollars are in debt every month, the balances are not shrinking. Among borrowers who still owe money on their student loans, only 37% of all borrowers saw their student loan balance decline, according to the Federal Reserve Bank of New York. That means that a large majority of borrowers are unfortunately not making any progress.
Average monthly student loan payment according to the amortization schedule
Most people who borrow to pay for their education use government student loans. These loans come with several safeguards, including income-driven repayment plans (IDR). Income-oriented repayment plans mean that your monthly payment is based on your certified income.
With these plans, your student loan balance can grow over time. Any money you put on your loan pays interest first and then principal. In many cases (especially for low wage earners) this means that there is no payment at all to the capital.
While an IDR plan can grow your credit balance, it can certainly improve your cash flow situation. And if you want to pay off your debt faster, you can always pay more than the monthly minimum required.
Below is how different payment plans would work for a single person making $ 48,000 per year with a loan balance of $ 30,000 (assuming the loan has a 4.5% interest rate).
Standard repayment plan for 10 years
Graduate Repayment Plan (10 Years)
Income-related repayment (ICR)
Income-based repayment (IBR)
If you’re interested in exploring different repayment options, check out Chipper. It compares all the repayment options based on your personalized information. This is especially important when your focus is more on managing debt than paying it off.
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Other options for student loan debt management
If you feel that you cannot afford the average monthly student loan payment for an IDR plan, you may be able to stop payments altogether by requesting a grace period.
All federal student loan borrowers can apply for a deferral at StudentAid.gov at any time. And some private lenders also offer hardship grace periods of 12 months or more. This is a big deal as personal student loans don’t qualify for IDR plans. These are the best private lenders for student loans.
Finally, if your income and creditworthiness are both strong, you may be able to reduce your monthly payment by refinancing your student loans at a lower interest rate. These are the best student loan refinancing companies.
Whether your student loan obligations are above or below the average monthly student loan payment, joining an IDR plan can be a great way to manage your debt.
However, be aware that these plans can extend your repayment period by up to 25 years. If you don’t want to deal with your own student loans when you have yours have Going to college kids, an intense period of targeted debt settlement might be the best for you.
A quick debt settlement is ideal for people who have an emergency fund, have some time and energy to devote to sideline jobs or career development, and do not qualify for loan relief. If that’s not you (or just isn’t you), the standard 10-year plan or an IDR plan may make more sense.