How much are monthly student loan payments

Based on the data available to Nitro, the total amount of student loan debt is over $1.75 trillion. This debt is not only created by recent graduates and current students; It also includes student loan borrowers who have been out of school for over a decade.

The standard repayment plan for both private and federal student loans 10 years, but research suggests it actually takes four-year degree holders an average of 19.7 years to pay off their loans.

In addition to the total student loan debt in the United States, here are some other useful student loan statistics:

• Current U.S. Student Loan Debt = est. $1.75 Trillion
• 1 in 4 Americans have student loan debt: An est. 44.7 Million people
• Average student loan debt amount = $37,172
• Average student loan payment = $393/month

The Different Types of Student Loans Available

When you start applying for student loans, you start to learn that there are a lot of different types of loans on the market. It can be difficult to determine exactly which type of loan is right for you. Generally, the different types of loans will fall into two categories: Federal Student Loans and Private Student Loans.

But, what is the difference between these different loan types?

Federal Student Loans

Federal student loans are provided directly by the federal government and the U.S. Department of Education. You can apply for federal loans by filling out the FAFSA (Free Application for Federal Student Aid). After applying for federal student aid, you may be approved for one or more of the following federal loan types:

• Parent PLUS Loans
• Subsidized or unsubsidized direct loans
• Subsidized or unsubsidized indirect loans
• Perkins loans
• FFEL loans

Each loan type has a few different qualifications and works a little differently when it comes to interest rates, monthly payments and forbearance. Additionally, all federal loans have a 6-month grace period before your repayment plan begins. This means that you have 6 months after you graduate or drop below half time enrollment before you have to start paying back your education loans.

Private Student Loans

Private student loans are provided from individual private lenders and can be secured at varying interest rates. While federal student loan interest rates are decided by the U.S. Department of Education, your private loans are decided by the lender themselves. If you have a high credit score or a cosigner with a high credit score, you may be able to secure fairly low rates on your loans.

However, private student loans do not qualify for any of the federal student loan forgiveness programs. They also start accruing interest immediately after you take them out, unlike federal student loans. Generally, we recommend securing federal funding before exploring private student loans.

The Average Monthly Student Loan Payment​​​​​​

The average monthly student loan payment was $393 in 2016 (the latest data available), which is like buying the newest Apple Watch every two months. That puts the average monthly payment nearly 55% higher than it was a decade ago.

Student loan payments have increased more than two-and-a-half times faster than the rate of inflation. If the typical $227 monthly bill student loan borrowers received in 2005 had kept pace with consumer prices, the cost would only have risen by 22.9% to $279. Paying off student loans is significantly more challenging today than it was in the past, but there are strategies borrowers can use to cut their interest rates and lower their monthly payments.

Alternative Student Loan Repayment Options

When most Americans start their student loan repayment plan, they do not understand the majority of alternative payment options available to them. The most common alternative repayment options include:

• Deferment: This is offered by all federal student loan lenders and some private lenders. Deferment gives you a longer grace period between payments that can last up to three years. You won't be able to make any qualifying payments on your loan balance during your deferment period. Additionally, your federally subsidized loans will not accrue interest throughout the deferment period.
• Forbearance: This is also offered by federal student loan lenders and some private lenders. The forbearance period usually lasts a minimum of 12 months and has no maximum time limit. During this time, you will have the option to make small payments towards the interest of your loans, but no other payments. Additionally, all loan types will accrue interest throughout the forbearance period.
• Forgiveness: Student loan forgiveness is the ideal alternative repayment route for most students, though federal student loan forgiveness has strict eligibility requirements. If you qualify for any federal loan forgiveness programs, it will cancel some of your outstanding student loan balance. The most common program that people qualify for is the Public Service Loan Forgiveness Program (PSLF). If you work in the healthcare field, for the government or for a nonprofit, you can have a portion of your federal student loans forgiven through that program.
• Refinance: You can refinance either private or federal student loans, as long as they are consolidated into one payment. The refinancing process allows you to find a new lender to apply a lower interest rate and set a new loan term. This can help save you money over time on both your federal and private loans, especially if you have a good credit score.

Federal Student Loan Repayment Statistics

About $1.05 trillion of Americans’ student loan debt is in the form of direct loans. That’s a steep increase from five years ago when the total was $508.7 billion. Currently, 52% of direct federal loan debt is in repayment. About 8% is in default because the borrower hasn’t made a payment in nine months or longer. The remaining 40% is “on hold” for a variety of reasons:

• 13% is held by students who are still in school
• 11% is in forbearance
• 11% is in deferment
• 5% is in a grace period
• 1% is classified as “other”

Forbearance and deferment enable many borrowers to postpone payments if they are experiencing economic hardship, like unemployment or a medical crisis; are serving in the military; or are continuing their studies through a fellowship, residency, or postgraduate study. The main difference is that interest always accrues during forbearance, but does not during some deferments.

The current breakdown is a significant change from the third quarter of 2013, when 42% of federal student loan debt was in repayment, 24% was held by students in school, 13% was in deferment, 8% was in forbearance, 7% was in a grace period, 5% was in default, and 1% was classified as “other.”

Why Is Student Loan Debt So High in the United States?

Student loan debt has ballooned in the past few decades, primarily because the costs associated with higher education – tuition, fees, housing, and books – have grown much faster than family incomes. The College Board has tracked costs at public and private universities since 1971.

When the organization first started monitoring prices, the average cost of one year at a public university was $1,410 ($8,730 in 2017 dollars). That was 15.6% of the median household income of $9,027 and manageable for many families without going into debt.

Fast forward to 2018, and the picture is very different. Today, the average cost of one year at a public university is $21,370, which is 34.8% of the median household income of $61,372. That could be why more than 70% of bachelor’s degree recipients emerge from college today with substantial student loan debt, and why many find themselves in need of loan consolidation and refinancing.

How Has The Pandemic Affected Student Loan Repayment Plans in 2022?

Starting with the Coronavirus Pandemic in early 2020, the federal government stepped in to make student loan repayment more manageable during this time of high unemployment rates and financial crisis. In order to save college graduates money, the federal government decided to put all federal student loans in forbearance temporarily.

This meant that there was a mass payment pause on all federal student loan payments. Initially, this was supposed to stop in January of 2022. However, the Biden administration extended the deadline to May 1, 2022 in order to give graduates extra time to restart their repayment plan. During this forbearance period, federal student loans would not accrue interest or require monthly payments from borrowers.

Frequently Asked Questions

What does delinquency mean for a student loan?

Delinquency is when your monthly loan balance goes unpaid for a certain period of time. After your loans are considered delinquent for 9 months, they go into default. If you have delinquent or default loans on your credit report, it can make it difficult for you to open new lines of credit in the future. This includes a mortgage, personal loan, credit card, and more.

Are there income-based repayment plans for low-income individuals?

Yes, the federal government offers income-based repayment plans for low-income individuals. These programs can help make your monthly payment much more manageable while still keeping your loans in good standing.

Do you have to pay back your student loans while still in school?

If you are enrolled in school more than half-time, you do not have to start paying back your federal student loans. However, some private lenders will require all students (even full-time ones) to start paying their loans back immediately after taking them out.

Learn More About Managing Your Student Loan Debt with Nitro College

Managing your student loan debt can be stressful, especially for recent graduates. However, there are plenty of resources out there to help make paying back your student loans much less stressful. Nitro College aims to provide resources for high school students, college students, and graduates for the best ways to pay back their student debt.

With Nitro College, you can get advice on every step of your college career: from applications to student loan repayment. Visit our blog to learn about more useful resources and advice to help you throughout your college career and beyond.

More student loan debt facts & statistics:

Note: The charts and statistics shown below are based on the most recently available data. As inflation has only increased, especially in the past 12 months, the consensus is these trends have only gotten worse.

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