The standard repayment term for federal student loans is 10 years, but the average time to pay off student loans is actually twice that amount of time, according to educational services company Cengage.
The amount of time it takes you to pay down your student debt depends on a few different factors, and there are ways to reduce your debt sentence.
Here’s what to know about expectations vs. reality for ditching student debt for good, and how you can pay off student loans faster.
How long does it take to pay off student loans?
The 2019 Cengage Student Opportunity Index shows that while recent graduates think they’ll be done with their student loans within six years, the average time to pay off student loans is actually 20 years.
This is primarily because despite having a 10-year standard repayment plan, the federal government allows student loan borrowers to extend their repayment term through various repayment plans.
If you’re looking to learn how to lower student loan payments, these additional repayment plans can help. But depending on which option you choose, you could extend your repayment term to up to 30 years. Not only does that draw out your debt payments for much longer, but it also results in you paying more interest over time.
If you’re wondering how long does it take to pay off student loans for you personally, it’ll depend on which payoff strategy you choose and your available cash flow.
How to pay off student loans faster
For most people, paying off student loans will take years, regardless of how you tackle them. But there are some ways you can accelerate the process:
- Add extra payments: Every month, your scheduled payment includes the interest your loans have accrued over the past month, and the rest goes toward paying down your principal balance. If you make an additional payment every month or a lump-sum payment every time you get a small windfall, such as a work bonus or tax refund, more of that money will go toward paying down your balance than covering interest charges.
- Refinance with a shorter term: If you’re eligible, you may be able to refinance your student loans with a private lender. Refinancing can not only potentially reduce your interest rate, but it can also give you the flexibility to choose a shorter repayment term to pay off debt more quickly with less total interest costs. Just make sure you consider your budget to determine whether you can afford the new payments.
- Refinance with a lower interest rate: Even if you don’t choose a shorter repayment term, you may qualify for a lower interest rate than what you’re currently paying. If you maintain the same repayment term, your monthly payment will go down and you’ll save money over the life of your loan. But if you continue paying what you’re paying now, more of your payments will go toward paying down the principal balance.
How to get a longer repayment term
While paying off your student loans early is ideal, some situations may make it challenging to add extra payments or refinance with a shorter term. Depending on your finances, you may even be more interested in extending your repayment term instead of shortening it to make your monthly payments more affordable.
If that’s the case, here are some options to consider:
- Apply for an income-driven repayment plan: If you have federal student loans, you can apply for one of four income-driven repayment plans. Each of these plans reduces your monthly payment to 10% to 20% of your discretionary income, which can relieve some pressure on your budget. These plans also extend your repayment term to up to 25 years, but you can make changes to your payoff strategy later as your financial situation improves.
- Refinance with a longer term: If you qualify for refinancing your student debt, you can also opt for a longer term instead of a shorter one. This may be a good approach if you can score a lower interest rate through refinancing than what you have now. Most private lenders offer repayment plans of up to 20 years.
- Consolidate your federal loans with a new servicer: If you want a longer repayment term but don’t want to lose access to federal loan benefits — such as loan forgiveness programs, income-driven repayment plans, and generous forbearance and deferment options — consider consolidating instead. A Direct Consolidation Loan allows you to choose a repayment plan of up to 30 years, depending on how much you owe.
Is refinancing the right option for you?
Refinancing your student loans can be a good way to achieve your financial goals, but it’s not right for everyone. The primary benefits include:
- The ability to get a lower interest rate and monthly payment.
- The flexibility to choose your own repayment term instead of being forced to choose from the few options the U.S. Department of Education provides.
- The chance to choose your lender based on your own research.
However, there are also some potential drawbacks to refinancing your student loans. For starters, there’s no guarantee that you’ll even qualify — you typically need a strong credit history and relatively high income. It’s possible to get a creditworthy cosigner to apply with you, but that’s no guarantee you’ll get the terms you want.
Also, refinancing will cause you to lose any benefits you get from having federal student loans. So it’s important to carefully consider both your short- and long-term plans and needs to ensure you make the right decision.
If you’re thinking about refinancing your student loans, be sure to shop around and compare rates and other terms with several lenders before you apply. Purefy’s Compare Rates tool allows you to do this with multiple lenders in one place, with just one fast form.
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The bottom line
Paying off student loans is a time-consuming process, and the idea of being stuck with student debt for two decades can be stressful. If you’re financially able, take some time to research ways you can pay off your student loans faster. And if you’re struggling to get by as it is, consider options for reducing your monthly payment for now, then revisit the situation as your income grows over time.