When you graduate from college, the standard repayment plan puts you on track to pay off your federal student loan debt in 10 years. If you stick with that plan, there’s a good chance your student loans will be gone by the time you reach your mid-30s.
However, reality doesn’t always reflect that ideal. According to research from Citizens Financial Group, 60 percent of student loan borrowers currently aged 35 and under believe they will pay off their student loans in their 40s.
Why does it take longer than expected to pay off student loan debt?
Unfortunately, many graduates aren’t able to stick with the standard repayment plan. The National Center for Education Statistics (NCES) found that students are struggling because of student loan debt.
According to an NCES report that tracked the high school class of 2002 for 10 years, 25 percent of borrowers worked more than one job because of student loan debt. On top of that, 34 percent of borrowers took less desirable jobs.
With borrowers struggling and wages stagnant over the last few years, graduates are extending their loan terms. Many do so through deferment, forbearance, or default. In the Direct Loan Program, there are 15.7 million borrowers in active repayment. Compare that number to the 10.1 million Direct Loan Program participants with loans in deferment, forbearance, or default.
Additionally, because it’s more difficult to afford student loan payments, more graduates are turning to income-driven repayment, which can extend student loan terms to 20 or 25 years — sometimes more than doubling the standard repayment period.
Analysis from the think tank New America indicates that borrowers are increasingly turning to these plans, which limit payments to a small percentage of a borrower’s income. From 2013 to 2014, the number of enrollees in these programs doubled.
The Citizens Financial Group survey found that borrowers spend nearly 18 percent of their salaries on student loan payments. With that stress on their paychecks, it’s little surprise more students extend their loan terms in the name of better cash flow each month.
How to pay off student debt sooner
If you don’t want to be stuck paying off your student loans into your 40s (or beyond), it makes sense to take action now.
Income-driven repayment makes sense when you are struggling to make payments. However, you can make a plan to boost your income and put more money toward student loan repayment. If you have time, consider starting a side gig for extra income.
Review your expenses and cut back on your spending. Apply the savings toward student loan repayment. Combine this strategy with increasing your income for better long-term results.
Finally, consider refinancing your student loans. According to the Citizens Financial Group survey, fewer than 50 percent of borrowers have looked into refinancing options. You might be able to lower your student loan interest rates and payments and reduce your loan term with the help of refinancing.
Before you refinance with a private lender, though, it’s important to understand that you could give up federal protections. Learn more about refinancing student loans and evaluate your options to get an idea of what might work best for you.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.50% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.49% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.48% effective April 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.49% – 7.27%1||Undergrad & Graduate|
|2.49% – 6.65%3||Undergrad & Graduate|
|2.49% – 7.41%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.49% – 7.11%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|