What are Student Loan Terms and Tips When Taking Out a Loan (2024)

FAQs

What are the loan terms for student loans? ›

Payments are fixed and made for up to 10 years (between 10 and 30 years for consolidation loans). Monthly payments can be higher than other plans, but total interest paid is usually lower and length of repayment is usually shorter.

Unless you arrange for a different repayment schedule with your loan servicer, the standard repayment schedule is 120 months (10 years). Payments are a fixed amount over the life of the loan. Your loan servicer is the company that sends you your bill each month.

You are required to make payments on time even if you don't receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time. Keep in touch with your loan servicer.

Check to make sure you don't have to start making payments until after graduation (this is standard for federal loans but not necessarily for private loans). How long the loan repayment period is. With a longer repayment period, your monthly payments will be lower, but you'll end up paying more interest.

Research from EducationData.org shows that almost 45.3 million Americans hold an average federal student loan debt balance of $37,338. Combined, student loan debt in the U.S. adds up to nearly $2 trillion. According to the same data, the average student loan monthly payment is $503.

What are the monthly payment amounts for federal student loans under the Standard Repayment Plan? Under the Standard Repayment Plan, you'll make fixed monthly payments of at least $50 for a period of up to 10 years for all loan types except Direct Consolidation Loans and FFEL Consolidation Loans.

Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans. In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

If you don't pick a repayment plan, your loan servicer will place you on the Standard Repayment Plan (a 10-year fixed payment repayment plan).

Are taking out student loans worth it? ›

Borrowing to earn a four-year college degree typically pays off, according to research from the College Board, a company that helps prepare students for higher education. This conclusion holds true even after considering the time out of the labor force when a student could have been earning money.

Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.

Before you apply for a student loan, it's important to consider the cost, how repayment works, consequences if you can't make your payments and how those payments might impact your other financial obligations and goals.

You'll typically need to agree to a credit check and provide details such as your school, cost of attendance, type of degree, citizenship information, Social Security number, proof of income and debt obligations. Depending on the lender, the application process can take a few minutes to a few days to complete.

Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.

Many college students end up needing at least some loans. But the long-term burden of debt can be overwhelming, with the average Class of 2021 graduate leaving school with more than $29,000 in federal and private student loan obligations. Few students manage to pay off these loans within the standard 10 years.

Income-Driven Repayment (IDR) Forgiveness

If you repay your loans under an IDR plan, any remaining balance on your student loans will be forgiven after you make a certain number of payments over 20 or 25 years—or as few as 10 years under our newest IDR plan, the Saving on a Valuable Education (SAVE) Plan.