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Average Student Loan Payment: What You Need To Know

Average student loan payment

Learning more about the average student loan payment is crucial if you plan to take out a student loan. Or if you manage your finances in college with an education loan. 

Making sure that your loans are fair requires a solid understanding of what the typical student pays and how to estimate your monthly payments. 

The interest rate, the loan amount, and the repayment schedule you choose all affect the amount you will need to pay back. 

This guide will explain everything you need to know about the average student loan payment. With that said, let’s begin. 

What Is The Average Student Loan Payment? 

The average student loan payment for those with outstanding student loan amounts was between $200 and $299 per month, according to Federal Reserve reports from 2019 and 2020.

30% of all individuals have taken out at least one educational debt, according to a Federal Reserve report. However, millions of Americans still owe money, while some borrowers have subsequently paid off their debt. 

In actuality, among those who still owe student loan debt, the median balance was between $20,000 and $24,999.

CARES Act provisions halting federal loan payments from 2020 to 2021 resulted in nearly three out of ten persons still owing money for their schooling paying nothing each month.

Although paying down student loans is considerably more complex now than ever, there are strategies you can use to lower your monthly payments and interest rates. 

But why is the student debt high in the U.S.? let’s find out in the next section. It might help you get a clear idea. 

The Reason Why Student Debt Is High In The U.S. 

Over the last few decades, student loan debt has skyrocketed due to rising higher education expenditures, such as tuition, housing, fees, and textbooks, which have outpaced family income increases. 

College Board has been keeping tabs on university fees since 1971.

Public university tuition in 2017 was $8,730 less expensive than when the group began tracking costs. This amounted to 15.6% of the median household’s $9,027 income, which was well within reach for most households.

The landscape has changed dramatically since then. Today, the average cost of a year at a public institution is $21,370, which is 34.8 percent of the typical household income of $61,372

Average Student Loan Payment: Will You Owe More Or Less? 

While it’s interesting to know the average student loan payment, it’s more crucial to understand your specific loan payment obligations.

Your payment amount and whether it’ll be higher or lesser than the average student loan depends on several factors. 

Here are a few main factors that affect how much you’ll pay in student loan monthly payments.

The Amount You Borrowed

Average student loan payment

Your payments each month will increase in proportion to the amount of your loan balance. Utilize scholarships and grants you’re not required to repay to cut down on the debt you incur. 

Additionally, refrain from borrowing for anything other than necessities; you don’t want to have to make a larger payment due to borrowing an expensive car while still in college.

The Sorts Of Student Loans You Have

A wide range of payment alternatives is available for federal student loans, including a standard repayment plan and IDR plans that include a cap on payments as a proportion of income. 

Focus on exhausting your federal loan eligibility before taking out other types of educational debt. This strategy is ideal if you want maximum flexibility in your monthly student loan payment size.

Once you’ve borrowed, private student loans don’t give you as much flexibility as federal loans because you have to stick to your repayment plan for the entire time you have the loan. 

However, various repayment schedules are available when choosing a lender, including loans with five-, seven-, or ten-year periods.

Your Loan Repayment Timeline 

A longer loan repayment period results in lower payments each month but higher overall loan expenses over time. And it doesn’t matter if you have private or federal loans. This is so that each payment can be lower by making more. 

However, the longer the repayment period, the longer you will have to pay interest, which raises your overall costs.

Your Interest Rate 

Interest is the cost of borrowing. That means taking out a loan with a higher interest rate will cost you more to repay.

Low fixed interest rates are common for federal student loans. Private student loan interest rates vary by lender and are determined by monetary criteria, including your credit score and income.

How To Calculate Your Monthly Loan Payments 

Using a loan calculator is the most straightforward way to get an idea of how much you may expect to pay back each month on your student loans

Total loan debt, interest rate (or use the average on all your interest rates if you have several loans), repayment period, and any additional monthly payments over the baseline must all be included. 

This will give you an idea of how much you’ll pay each month and over the year. It’s available on the UniCreds website for students to calculate their student loan repayments. Use this calculator strictly as a planning tool. 

Based on the prepayment scenario you choose, your loan term, and a typical repayment plan where you make a set of payments each month for a specified number of months, the finding makes the below assumptions: 

  • A Fixed rate: the student repayment calculator doesn’t factor in a variable interest rate. 
  • Your student loan is in repayment currently. 
  • To ensure that the student loan calculator is accurate and relevant, UniCreds recommends that you consult a certified financial professional.

Average Student Loan Payment: Other Alternatives To Repay Loans 

Options for alternative repayment include the following:


All federal and some private loan lenders offer this service. Deferment allows you to put off payments for up to three years. After that, making eligible loan payments is impossible while you defer impossible. 

Furthermore, you won’t be charged interest on your federally subsidized loans throughout the deferral period.


Some private and federal student loan lenders also provide this option. In most cases, the forbearance period lasts at least a year but is not limited in duration. Paying interest on your debts is permitted during this time, but you will not be able to make further payments.

Student Loan Forgiveness

Student loan forgiveness is the best option repayment option for most college students. Students who qualify for this program will have some of their student loan debt forgiven. 

The Public Service Loan Forgiveness Program is the most often used repayment method. 

To be eligible for loan forgiveness, you must work in the public sector or a non-profit organization.

Student Loan Refinancing 

You may be able to lower your monthly payment by refinancing your student loans with private lenders. Loan forgiveness and other benefits for borrowers would be sacrificed if government loans were converted to private ones.

You can refinance either federal or private loans. You may want to refinance your current private loans to save money on interest. Moreover, you can pay off your higher-rate old debts with a lower-rate new loan. 

Paying off your new loan sooner or later may result in cheaper monthly payments, lower interest charges, or maybe both.

How To Reduce Average Student Loan Payment 

Average student loan payment

There are a few ways to lower the amount you’ll pay each month if you want to make lower payments than typical for student loans.

Borrow Only What You Need. 

You’ll graduate with a lesser loan balance and, thus, a cheaper monthly payment if you limit your borrowing.

Choose Your Repayment Plan Carefully

Federal student loan choices that can cut your monthly payments include IDR plans or extended repayment programs. But, over time, they could raise the interest amount paid.

Regarding private student loans, you should carefully consider whether you would prefer a longer or shorter payoff period upfront. 

This choice must be made before borrowing so that you can apply for the desired loan.

Change Your Repayment Plans 

If you have federal loans, unless you opt for a different plan, you’ll be put on the standard plan when you graduate. You’ll be debt-free in ten years if you follow the standard repayment schedule, which divides your sum into 120 equal monthly payments.

However, for many borrowers, that can result in hefty payments. Because of this, the government provides additional choices, such as the graduated repayment plan. 

With that option, payments rise gradually over time, understanding that as you advance in your career, your income will do likewise.

PAYE, ICR, IBR, and REPAYE are some income-driven repayment options that connect your monthly loan payments directly to your income, keeping loan expenses between ten percent and 20 percent of your income.

Get The Best Interest rate By Shopping Around.

When applying for private student loans, compare rates from various lenders before borrowing. Then, to choose the most affordable loan, compare rates and loan terms, such as timetables for repayment.

Average Student Loan Payment: How To Reduce Your Private Loan Payments 

If scholarships, grants, and federal loans don’t cover all of a student’s costs, you may need to take out private student loans. On the other hand, private loan borrowers have far fewer alternatives for lowering their monthly payments. 

Many borrowers are now considering refinancing their private loans due to this development. Therefore, consolidating your student loans is equivalent to refinancing your student loans privately. 

It’s a way to consolidate several student debts into a single one. You may be able to get a cheaper interest rate on the new student loan, which could cut your monthly payment. However, a reduced monthly payment may make it easier to manage your repayment plan.

Refinancing Comes With Additional Benefits 

Refinancing student loans brings additional benefits. Even if you consolidate federal and private student loans, you’ll lose access to federal student loan perks like IDR plans if you do so. In addition, an initial cosigner can be released from the loan by refinancing.

Consider the long-term financial implications of student loan refinancing before making a decision. Even if the new interest rate is lower, you’ll pay more interest throughout the loan due to the extended repayment period.

It’s About How Much You Owe, Not The Amount You Pay

The amount of student debt you owe appears to be the essential factor in estimating how long it’ll take for you to pay them, rather than how much you pay each month.

It’s interesting to note that despite having some of the highest average monthly student loan payments, several states with the lowest average monthly payments had the most extended repayment times.

Because the average student loan debt in these regions is in the low-to-mid thirties, many of these states scored highly for monthly student loan payments and had some of the longest repayment durations.

Different Federal Student Loans Available To You 

A total of four federal student loans are offered to those who qualify.

Direct Consolidated Loans. As a result of this federal loan, you can consolidate all of your federal student loans into a single loan server.

Direct Subsidized Loans. To cover college education costs, you may be eligible for direct subsidized loans, which are exclusively available to undergraduate students.

Direct Unsubsidized Loans. Undergraduates, graduates, professionals, etc., are eligible for Direct Unsubsidized Loans. This loan isn’t based on a borrower’s ability to repay and can be used for any purpose.

Direct PLUS Loans. For students who have not previously taken out a financial aid loan, Direct Plus Loans are available if you meet the eligibility requirements.

How Do You Know if You Qualify For A Student Loan?

Applicants must be U.S. citizens; if they aren’t, they must complete additional paperwork. For example, a social security number is required, and you must be a student at a degree-granting institution. 

You’ll need to keep track of your academic records and sign several forms while applying for various programs. In addition, proof of general education growth is required before applying to a career program. 

Before submitting the forms, ensure you’ve read through the guidelines.

Average Student Loan Payment: Which Student Loan is Better? 

Average student loan payment

Federal loans offer the best value for students due to their low-interest rates, whereas private loans typically carry higher rates. In addition, the government loan is more reliable because you must complete an application form. 

Federal loans require a job, but private lenders can be found. Federal loans can be repaid on a monthly or annual basis. 

If you don’t pay back a private loan on time, there are more severe consequences. However, if you do so with a federal student loan, you have more time to do so.

Private Student Loans 

Many financial institutions, banks, and credit unions will give you private student loans. The interest rate on the private student loan is 1.2 percent, whereas the student loan has a maximum interest rate of 14 percent. 

Because it’s a public concern and only a small number of people wish to take out private loans, it’s tough to track down information about the loan. 

If they don’t pay back on time, you’ll face sanctions. In addition, students who don’t have jobs owe anywhere from $20,000 to $40,000 in student loans.

Federal Student Loans 

The federal student loan has a set interest rate, and you should get a payment for that. You must pay back the government loan within the specified time frame. But you can spread the repayment payments over several years if you like. 

You can pay while you’re in school, and there are a couple of amounts you can pay back once you’ve graduated. In addition, you have the flexibility to make payments on your federal loans whenever you want, even if you are delaying the due date. 

If you have a job, you may be entitled to some benefits. Therefore, keeping track of your borrowing and repayment amounts is essential.

Final Thoughts 

It doesn’t matter if you owe more or less than the average student loan payment; an IDR plan can help you manage your debt. However, you should be aware that these plans can result in a 25-year extension of your repayment time. Therefore, if you don’t want to deal with your student debt when sending your children to college, a total debt repayment time might be best for you. A rapid debt repayment is a great option if you’ve got emergency money, some spare time, and energy and don’t qualify for loan forgiveness. However, an IDR plan or the Standard 10-Year plan may be a better fit for those who aren’t.