What is the Average Student Loan Payment? Estimate How Much Your Payment Will Be
Want to know how your student loan payment compares to everyone else? This article breaks down the average payment and what yours might be.
Christy Rakoczy Bieber
Oct 07, 2021
If you're thinking about borrowing for school, or if you have already taken out student loans, you may be interested in learning how much the average student loan payment is. Understanding what the typical student pays -- and knowing how to estimate your own monthly payments -- is important to make sure your loans are affordable.
Here's the average college loan payment amount, as well as some tips on figuring out how much your loans could cost you.
How much are average monthly student loan payments?
Reports from the Federal Reserve from 2019 to 2020 reported the average monthly student loan payment at between $200 and $299 per month among those with outstanding student loan balances.
According to a report from the Federal Reserve, 30% of all adults have taken on at least one educational loan. While some of those student loan borrowers have since paid back their debt, millions of Americans still owe money. In fact, the median outstanding student loan balance among those who still owe educational debt was between $20,000 and $24,999. The average student loan debt is approximately $37,013.
Many people had their loans deferred from 2020 to 2021, with close to three in 10 adults who still owed money for their education paying $0 per month due to CARES Act provisions pausing federal student loan payments, but expect those average payments to be back to at least pre-CARES Act levels when those provisions expire at the end of 2021.
Will you owe more or less than the average student loan payment?
Knowing the average college loan payment is interesting, but it's not as important as knowing how much you will personally have to pay for your student debt.
A number of factors affect the amount of your payment and whether your personal financial obligations will be more or less than the average student loan payment. Here are some of the key considerations that determine what you'll owe each month on your school loans.
The amount borrowed
The higher your loan balance, the more your monthly payments will be.
Aim to reduce the amount you borrow by taking advantage of scholarships and grants that you do not have to pay back. And don't borrow for anything other than necessities, as you don't want to end up with a higher payment because you borrowed for spring break or buying an expensive car while in college.
The types of loans you have
Federal Direct loans issued by the U.S. Department of Education offer a wide variety of payment options, including a standard repayment plan as well as income-driven plans that cap payments as a percentage of income. If you want the most flexibility in the amount of your monthly student loan payment, focus on exhausting eligibility for federal loans before taking on other kinds of educational debt.
Parent PLUS loans are federal loans offered to parents or guardians of students. While they have some benefits that federal loans have, they generally have a higher interest rate than undergrad and graduate student loans.
Private student loans don't offer as much flexibility as federal loans once you've borrowed since you're committing to your repayment plan for the duration of the time you have your loan. But when you are choosing a lender, you have a wide variety of different student loan repayment timelines you can choose from, such as loans with five-year, seven-year, or 10-year terms.
Your repayment timeline
Whether you have federal loans or private loans, a longer loan repayment timeline results in lower monthly payments but higher total loan costs over time. That's because making more payments allows each one to be lower. But making payments over a longer period means that you will pay interest for a longer time, which raises your total costs. Putting your loans into deferment or forbearance generally also increases the repayment term and may increase interest charges as well.
Your interest rate
A loan with a higher loan interest rate will be more expensive to repay over the life of the loan since interest is the cost of borrowing.
Most federal student loans have low fixed interest rates. Rates on private student loans vary by lender and based on financial factors such as your income and credit score.
How can you find out how much your student loan payment will be?
To see how much your student loan payment will be and how it compares to the average monthly student loan payments, there are a few different tools you can use.
If you have federal student loans, the best way to determine your monthly payment is to use the Federal Student Aid's Loan Simulator. This allows you to see how much your payment will be based on the amount that you borrow as well as the repayment plan that you choose.
If you have private student loans, there are a number of online loan repayment calculators that you can use to estimate your payment amount based on loan rate, payoff time, and years left of school.
If you already have taken out your student loans, signing into your online account with your loan servicer can also help you to see exactly what your monthly payments are -- and whether you have any options to make changes to that monthly amount by switching your payment plan.
How to lower your average college loan payment
If you're hoping for monthly payments that are below average student loan payments, there are a few techniques you can use to reduce the amount you'll owe each month.
Borrow only what you need
Keeping student loan borrowing to a minimum will allow you to graduate with a lower loan balance and thus a lower monthly payment.
Shop around to get the best interest rate
If you are taking out private student loans, shop around with different private lenders before you borrow. Compare student loan interest rates and loan terms, such as payoff timelines, to decide on a loan that is most affordable for you.
Choose your payoff plan carefully
Income-driven or extended repayment plans are options for federal student loans that can lower your monthly payments. They may increase the interest paid overtime, though.
With private student loans, you'll want to think carefully upfront about whether you'd prefer a longer or shorter payoff time, as this decision needs to be made before you borrow so you can apply for the desired loan.
Consider refinancing your student loan debt
Private student loan lenders offer refinance loans, which can sometimes reduce your monthly cost below the average student loan payment. You can refinance federal or private loans, but converting federal to private loans would mean giving up student loan forgiveness program options like Public Service Loan Forgiveness (PSLF) and other important borrower benefits and repayment options.
Student loan refinancing for private loans makes sense if you can qualify for a new loan at a lower interest rate than you are paying on your current debt. You can use the new loan at the lower rate to pay off your old loans that were more expensive. Depending on the repayment timeline on your new loan, you may lower your monthly payment, lower your total interest costs, or both.
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Written By
Christy Rakoczy Bieber
Christy Rakoczy Bieber is a full-time personal finance and legal writer. She is a graduate of UCLA School of Law and the University of Rochester. Christy was previously a college teacher with experience writing textbooks and serving as a subject matter expert.
