Gone are the days when college was actually affordable. But wait, was it ever?
Every student dreams of studying in a prestigious college, doing their favorite degree and ending up with their dream job. But all of this process requires money, and lots of it! An average American earns only enough to meet his daily expenses and save a little for a year-end vacation. Affording college tuition in this income is not possible for many.
The government understands this, which is why it offers student loans to many of its students. They take the loan and whether they complete their degree or not, they have to pay it all back in portions for the next couple of years.
Statistics show that over 35 million students have borrowed student loans to pay their fees and the current student loan debt is $1.56 trillion.
Here are the current student loan interest rates combined in one table.
| Refinance student loans | |
| Fixed | 3.20% to 8.63% |
| Variable | 1.99% to 8.38% |
| Private student loans | |
| Fixed | 3.82% to 14.50% |
| Variable | 1.20% to 12.99% |
| Federal student loans (fixed) | |
| Undergraduate | 2.75% |
| Graduate | 4.30% |
| PLUS (Parent, Grad) | 5.30% |
Note: Sample rates have been extracted online, courtesy of NerdWallet.
The average student loan interest rate is 5.8%. With a 5.8% interest rate on $30,000 of student loans, a borrower would pay about $9,600 in interest throughout 10 years. This is the basic of how a student loan works.
This figure is obviously higher, with the average private student loan interest rate hitting almost 7.81% in 2020. More than 1.4 million students look for private student loan options to fund their college fees and their routine expenses.
Paying back your student loans starts once you secure the funds. Federal loans typically require repayment within 10 years, while private loans can extend from 5 to 20 years.
As a graduate, your monthly payments may begin as low as $172 and increase gradually to $516. On average, expect to repay around $344 monthly.
Numerous online calculators can estimate your monthly repayment amount accurately. Try our Student Loan Repayment Calculator for a quick estimate.
Here are the best student loan refinance companies of 2020, so if you’re looking for a student loan, you should head to these companies for assistance.
Despite the steep costs of higher education, numerous companies and federally funded programs strive to ease the burden. They offer student loans with flexible repayment plans, benefiting many students.
It’s crucial to repay loans on time, but rising interest rates can make this challenging. Fortunately, specific forgiveness programs exist for those facing financial strain. When possible, borrow only what you need to cover college costs comfortably.
Even if students leave college before graduating, loan repayment remains mandatory. It’s essential to plan finances wisely and explore all available options for managing educational expenses.
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