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Laurel Road: Exploring How Long It Takes to Pay Off Student Loan Debt

Laurel Road: Exploring How Long It Takes to Pay Off Student Loan Debt

Laurel Road: The journey to repay student loan debt could take many years, depending on various factors. On average, borrowers take about 20 years to pay off their loans, but with a relatively small balance, they may be able to pay off the debt within just a few years of graduation. And borrowers with the resources to make substantial payments may drastically reduce their repayment time. Read on to learn more about the factors that determine how long it takes to pay off student loan debt. 

Types of student loans 

The type of student loan will influence repayment options and timelines. Federal loans, which account for about 90% of student debt, offer repayment plans and programs with various loan terms. Private loan terms depend on the individual lender, as some may have variable rates that could affect repayment timelines. Private loans may take between 5 and 20 years to repay, depending on the financial institution's guidelines. 

Repayment plans

A borrower's repayment plan plays a major role in determining the time it takes to pay off  their student loan debt. Each private lender may offer unique payment plan options, and refinancing could either extend or shorten the payment term. Federal student loans offer several options, such as income-driven repayment plans, that depend on a borrower's income, and several that don't. Each plan can impact how long it takes to repay a loan: 

Income-Driven Repayment (IDR) plans are typically paced at 20 or 25 years of payments, after which the balance may be eligible for student loan forgiveness. Those who work in the public sector or at a qualifying non-profit may also qualify for Public Service Loan Forgiveness (PSLF) with a repayment plan of ten years before loan forgiveness.  

In the Standard Repayment Plan, borrowers pay a fixed monthly amount to repay their student loan within ten years. Most people with student loan debt automatically enroll in this plan. 

What else affects repayment timelines? 

Additional factors could influence how long it takes students to repay their loans.  

Federal Proposals. Since 2020, student loan payments and interest have been paused in response to the COVID-19 pandemic, and the Biden-Harris administration has also proposed a student loan relief plan which would eliminate $10,000 or $20,000 of debt for qualifying borrowers. Other proposals include reforms to IDR plans. Each of these decisions may impact repayment timelines for federal student loans.  

Forbearance or Deferment. Borrowers who are struggling with payments may apply for forbearance or deferment. Forbearance pauses payments for up to a year at a time, but the loans may continue accruing interest. Alternatively, if a borrower is in school, unemployed, or meets other need-based qualifications, they may apply for deferment, which delays loan payments as long as the need persists. Perkins loans and subsidized loans don't accumulate interest during deferment. However, both forbearance and deferment may extend repayment terms by several years, which is why an IDR plan is generally considered a better option for those who need help making loan payments. 

Consolidation. Borrowers may consolidate multiple loans to streamline their repayment process. Sometimes, loan consolidation could reset the repayment schedule, potentially even extending the repayment period to 30 years. 

Principal Payments. Borrowers with the means can always contribute extra payments toward their principal loan balance, which will not only cut the total repayment time but also reduce the total interest paid over the life of the loan.  

Final Thoughts 

Most repayment plans allow for debt resolution within 10 to 25 years with consistent payments. Borrowers struggling to make monthly payments have options to make the process more manageable—through refinancing or a new payment plan—though it may extend the term of the loan. Meanwhile, those with the resources could choose to accelerate their loan repayment process by making larger monthly payments or by paying down the principal. There are many paths available, depending on the borrower's loan type, balance, resources, and future financial plans.  

About Laurel Road 

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $7 billion in federal and private school loans.

Contact Information:
Carolina d'Arbelles-Valle
Senior Public Relations Specialist
[email protected]
(201) 633-2125

Original Source: Laurel Road: Exploring How Long It Takes to Pay Off Student Loan Debt Laurel Road: Exploring How Long It Takes to Pay Off Student Loan Debt

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