How Long Does it Take to Pay Back Student Loans?

If you’re looking to continue your education at a college or university, chances are you are going to need to take out some loans to cover the expenses. While loans can be an excellent way to give you some extra cash when you need it, you’re going to want to consider the repayment schedule that will need to be created.

When you first receive a loan, you may think it is essentially “free money.” But actually, most student loans will come with interest, meaning you’re going to end up paying more for the loan than what you borrowed. Even so, student loans are necessary for getting a degree for many people.

How Long Does it take to Pay Off College Loans?

Before signing an agreement to a student loan, you need to consider the repayment schedule. Borrowing too much money can leave you paying hundreds or even thousands of dollars every month trying to bring your debt down. What may feel like free cash now could end up hurting you when the time comes to start making payments.

The major and career path is also incredibly important to consider when thinking of repaying your loans. While some high-paying careers require more education, and therefore more loans, you have a better chance of paying those loans off quickly. If you're anticipating a relatively low-paying career, you don't want to riddle yourself with debt that will be a struggle to pay off.

The amount of loans that you take out when going to school needs to be partially reflective of what you plan to make when you graduate. While you can never anticipate the job you will get after graduation, you need to be realistic about your goals, what you can achieve, and how much money you will realistically be able to contribute to your loans each month.

In 2016, college graduates had an average of over $37,000 in debt. For some, that number was much higher. For someone who has never debt with loans before, Understanding the repayment process may be difficult. You probably have a lot of questions, but one of the biggest questions you may be asking is, “How long does it take to pay off student loans?”

The answer to this question depends on a lot of things. Here is an easy-to-follow breakdown to help you understand what your repayment schedule could look like.

Different Kinds of Repayment Plans

While your repayment plan options will depend on the loan that you take out, there are some different options in regards to how you make payments on your student loans. The repayment plan option that you choose will influence how much money you spend each month and ultimately, how long it takes you to repay your student loan. Below are a few of the repayment plan options that may be available to you.

Standard Repayment Plan

With a Standard Repayment Plan, you make the same loan payment every month through the entire duration of your repayment schedule. Depending on the overall amount of the loan, this could be a relatively high amount. For some people, the amount of money owed on a Standard Repayment Plan might be too much for them right out of college.

A Standard Repayment Plan allows you to spread the cost of the loan over up to ten years, so each month for ten years, you will owe a set amount of money to your student loan. This repayment plan can take time, but it ultimately allows you to pay less money overall because of accumulating interest.

Graduated Repayment Plan

A Graduated Repayment Plan allows you to start your payments low and then increased them every few years until the loan is completely paid off. Like a Standard Repayment Plan, you can have up to 10 years to spread out your loan, with the increases in repayment amounts increasing about every two years.

A Graduated Repayment Plan is ideal for someone with high repayment amounts that may not be making enough to cover the complete amount right out of school. Because you are making smaller payments, you are allowing more interest to accumulate on the loan. This means a Graduated Repayment Plan will have you paying more overall than the Standard Repayment Plan.

Extended Repayment Plan

An Extended Repayment Plan works the same as a Standard Repayment Plan or Graduated Repayment Plan, but instead of needing to complete your payments within 10 years, you have up to 25 years to pay off your student loan.

This option allows you to reduce your payments amount even more, but also means that interest will have more time to accumulate.

Pay as You Earn Repayment Plan

A Pay as You Earn Repayment Plan looks at the amount of money that you are making in income and allows you to pay a portion of that to your student loan. Depending on the amount of the loan or how much money you make, this could mean you’re paying more than you would for a Standard Repayment Plan.

With a Pay as You Earn Repayment Plan, you will have between 20 and 25 years to repay your loan. At the end of that time, if your loan has not been paid off, your loan will be forgiven.

The repayment schedule that you decide upon will greatly influence how long it takes you to pay off your student loan. While you don’t want to overwhelm yourself by spending too much money on your monthly payments, you’ll also want to select a repayment plan that allows you to get out of debt as quickly as financially possible.

Paying off Your Student Loan Debt

When thinking about how you’re going to pay off your student loan debt, you need to be realistic about what is right for you. While someone may be able to pay off their debt in just a couple years after graduation, you may be paying for years and years. But there are some things that can help you get out of debt more quickly.

First and foremost, don’t borrow money that you don’t need to borrow. While it may seem like a very good idea to have extra cash while in college, you’re going to pay more for it with the interest in the end. If you can, borrow as little money as possible to keep your loan payments low.

If you can’t get through college without student loans, try making bi-weekly payments instead of just monthly. This strategy can help you to cut interest off your loan so you can get out of debt more quickly.

Another great and easy strategy is to add small bits onto your payment each month. While you may not be able to spare an extra hundred, adding an extra $20 each month can quickly add up and help you pay your debt off faster.

Your student loan payments shouldn’t be debilitating and keep you from living your life. Create a smart repayment plan that works for you, your income, and what you can realistically afford to repay. Put the additional money towards your student loan whenever you can. How long it takes you to pay off your loan and get out of debt will depend on the choices that you make.