The average student loan payment is between $200 and $299, according to the most recent available data from the Federal Reserve. But considering the average debt among recent graduates who took out student loans is nearly $30,000, per an analysis by U.S. News, the monthly payment on a 10-year standard repayment plan would be on the higher end of that range — around $300.
How much you pay toward your student loans each month will depend on a number of factors, such as the cost of your college program, the type of student loans you borrow and the repayment plan you choose.
[Personal Loan Calculator: Estimate Monthly Student Loan Payments]
How Are Student Loan Payments Determined?
Student loan payments are based on your loan amount, interest rate and repayment period, or loan length. The more money you borrow to pay for college, the higher your payments will be once you graduate. Lower interest rates will result in lower monthly payments, and vice versa. Choosing a shorter repayment period can help you pay off your loans faster, but your monthly payments will be higher.
But the process of taking out and repaying student loans is far more nuanced than those three factors. A graduate degree can leave you with higher student loan payments, but it may help increase your lifetime earning potential. And with rising tuition costs, it can be challenging to plan for monthly payments, even if you choose an in-state public university. Here are a few critical education decisions that can impact your student loan payments.
The Cost of the College You Attend
Public universities are typically cheaper than private colleges, particularly if you can qualify for in-state tuition. This means the average student loan payment among those who graduate from a public school is much lower than for those who attended a private college.
| Average Student Loan Debt* | Estimated Student Loan Payment** | |
| All colleges | $30,500 | $316 |
| Public colleges | $27,430 | $284 |
| Private nonprofit colleges | $33,910 | $351 |
| Private for-profit colleges | $40,970 | $425 |
| *Cumulative student loan debt for bachelor’s degree recipients in the 2019-20 academic year. Source: National Center for Education Statistics. **Under the 10-year standard repayment plan at an average rate of 4.5%. |
While the data shows that private college graduates carry more student loan debt, it’s important to consider all options for your unique circumstances. For example, a private school that offers a generous scholarship package may end up being cheaper than a public college at full tuition, resulting in lower future payments. Still, it’s a personal decision to determine whether the higher cost of one university is worth the investment.
The Type of Degree You Obtain
Obtaining a graduate degree can help advance your career and potentially increase your income over time; in many fields of study, such as law or medicine, a professional degree is a requirement. Naturally, the cost of going to college for an additional two to eight years will greatly increase the amount of student loan debt you accrue, leading to higher monthly payments once you’re in the workforce.
For some professions, it may eventually pay off to take out six figures’ worth of student debt, but you’ll need to be prepared for much higher student loan payments if you plan to go back to school for a graduate or professional degree.
| Average Student Loan Debt* | Estimated Student Loan Payment** | |
| Master’s | $69,140 | $768 |
| Law (J.D. or LL.B.) | $140,870 | $1,564 |
| Medicine (M.D. or D.O.) | $199,220 | $2,212 |
| *Cumulative student loan debt for graduate degree recipients in the 2019-20 academic year. Source: National Center for Education Statistics. **Under the 10-year standard repayment plan at an average rate of 6%. |
One important consideration if you’re thinking about earning an advanced degree is the federal student loan borrowing limit. Independent students can borrow up to $138,500 of federal direct student loans to pay for their undergraduate and graduate or professional studies. For any amount beyond that, you’d need to borrow federal grad PLUS loans, which come with a higher interest rate and monthly payment than other federal direct loans.
[Read: Best Private Student Loans.]
The Type of Student Loans You Borrow
There are two general types of student loans: federal and private. Most borrowers will benefit from the low interest rates and flexible repayment options offered by federal student loans. Depending on your financial need, you may also qualify for a subsidized federal loan, in which the government pays the interest on your loans while you’re in school.
Some students, particularly those who are obtaining costly professional degrees, may choose to borrow private student loans when federal aid doesn’t fully cover the cost of college. About 15% of students who earned an bachelor’s degree in 2019-20 received nonfederal loans, which includes private student loans, according to the National Center for Education Statistics.
It’s difficult to estimate an average private student loan payment since the borrowing terms can vary widely from one applicant to the next. Still, let’s use this example: If you need to borrow an additional $10,000 of private student loans in order to pay for college, the monthly payments (assuming a 10-year loan length and an 8% interest rate) would be $121. That’s in addition to your federal student loan payments.
Also, you may be required to make payments on your private student loans while you’re still in school. And after you graduate or otherwise leave school, you could end up with both federal and private student loan payments.
The Repayment Plan You Choose
Federal student loan borrowers can choose from a number of repayment plans. Some are aimed at lowering your monthly payments, while others can help pay off your debt within a designated time frame. Here’s a rundown of your options:
— Standard repayment plan. Payments are fixed (and stay the same) for a period of 10 years. All borrowers are eligible for this plan.
— Graduated repayment plan. Payments start off lower and increase over time, typically every two years, for a total repayment period of 10 years. All borrowers are eligible for this plan.
— Extended repayment plan. Borrowers with more than $30,000 of federal student loan debt may be eligible to extend their repayment period to 25 years. Extended repayment can either be fixed or graduated.
— Income-driven repayment, or IDR, plans. Payments are limited to a set percentage of your discretionary income, and any outstanding loan balance is forgiven after 20 or 25 years. There are several types of IDR plans, and each has its own eligibility requirements.
Private student loans aren’t eligible for these federal repayment plans, and the repayment options vary from one private lender to the next. Private student loans are typically repaid at fixed or variable interest rates over a period of five to 20 years. Some lenders may require you to make interest-only or fixed payments while you’re still in school, while others may offer in-school deferment.
The Interest Rate and Fees You Pay
Federal student loan interest rates are set based on the year of origination. For example, if you took out a federal direct loan for undergraduate studies during the 2023-24 academic year, the current interest rate on that loan is 5.5% — although this rate has been as low as 2.75% in 2020-21 and as high as 6.8% in 2006-08.
Your interest rate also depends on the type of federal loan you need to borrow. Graduate students and parent PLUS loan borrowers pay a higher interest rate than undergraduates.
| Current Federal Student Loan Rates | Average Rate (2006-Present) | |
| Undergraduate | 5.5% | 4.67% |
| Graduate or Professional | 7.05% | 6.23% |
| Grad or Parent PLUS | 8.05% | 7.27% |
Federal student loan borrowers must also pay an origination fee that’s a set percentage of the loan amount and is added to the principal balance. The current federal student loan fee is 1.057% for most loans, except for PLUS loans, which come with a loan fee of 4.228%.
Whereas federal student loan rates are the same across all borrowers during the same time period, private student loan interest rates will vary from one borrower to another. Private student loan lenders determine your interest rate and eligibility based on your credit history, including credit score and debt-to-income ratio. Private student loan fixed rates average between 4.41% and 14.49%, according to a November 2023 U.S. News analysis of private lenders.
Tip: If you can’t qualify for a competitive rate on a private student loan, consider taking steps to improve your credit score or enlisting the help of a creditworthy co-signer such as a trusted relative.
[READ Best Student Loan Refinance Lenders]
How to Plan for Your Student Loan Payments
If you’re deciding where to go to college or whether you should further your education with a graduate degree, you’ll want to know how much you’ll pay toward your student loan debt each month after graduation. Here’s how you can estimate your future student loan payments.
Determine How Much You’ll Need to Borrow
Estimating the cost of college is an important yet challenging step to determining your student loan payments. You can see a college’s full cost of attendance by filling out the Free Application for Federal Student Aid, or FAFSA. Completing this form is required by schools to determine whether you’re eligible for federal student loans, as well as grants and work-study programs, which can cut down on how much you need to borrow.
Additionally, colleges are required to publish a net price calculator that details a comprehensive cost estimate, including commonly overlooked expenses such as transportation and school supplies.
Estimate the Interest Rate You’ll Pay
For the 2023-24 academic year, the interest rate on federal direct loans for undergraduate students is 5.5%. The current rate for graduate or professional students is 7.05%, and it’s 8.05% for PLUS loan borrowers.
If you need to borrow private student loans to bridge the college financing gap, it can be more difficult to estimate your interest rate since private student loan rates vary depending on the borrower. However, many private lenders let you get prequalified to check your estimated rate with a soft credit inquiry, which won’t impact your credit score.
Use a Student Loan Payment Calculator
The Department of Education offers a loan simulator tool that allows you to calculate your monthly payments based on your projected loan amount, degree type and repayment plan. You can enter a university’s name and location to estimate how much the program might cost. The tool can also determine which repayment plan is best for you, and if you qualify for programs such as Public Service Loan Forgiveness, or PSLF.
For private student loans, you can use the U.S. News loan calculator to estimate your monthly payments by inputting the loan amount, repayment length and interest rate.
More from U.S. News
Private Student Loans vs. Federal Student Loans: What’s the Difference?
What to Do With Student Loan Debt in Retirement
7 Strategies to Get Out of Student Loan Debt
What Is the Average Student Loan Payment? originally appeared on usnews.com
Update 12/15/23: This story was published at an earlier date and has been updated with new information.
