It’s no secret that student debt is massive. The overall balance of student loans is currently estimated to be nearly $1.5 trillion (yes, trillion), with 44.7 million people in the U.S. having a share of this debt to pay back.
If you have student loan debt, it’s natural to wonder where you fall within this debt spectrum. Do you owe, say, the average amount for someone in your situation? Or do you owe more—or, if you’re lucky, less?
This post will share a wide range of facts about today’s student loan debt to help you put your situation in perspective.
Student Loan Balance Overview
A 2018 article in Forbes.com provides a snapshot of today’s student loan debt, including the statistics we shared up top; the article also states how the average student debt for students in the class of 2016 is $37,172.
Here are the categories of student loan balance breakdowns:
• Student loan debt of $100,000 or less: 42 million borrowers
• Student loan debt of more than $100,000: 2 million borrowers (of that, 415,000 have debt higher than $200,000)
• Student loan debt of $10,000-$25,000: 12.4 million borrowers
The amount of debt owed varies by state, with states having larger populations also bearing a larger proportion of student loan debt. In fact, people in just four states are carrying 20% of this debt.
Here’s something else to consider. If you’re getting ready to need to start paying back what you owe, you may know how much you originally borrowed, but how can you tell what you owe with accumulated interest added on?
Checking Your Student Loan Balance
Student loans come in two broad types, federal and private. Federal loans are either subsidized or unsubsidized. If it’s the former, then the government has been paying your interest while you’ve been in school and you only become responsible for interest when you’re no longer in college (and after your six-month grace period). With unsubsidized loans, the interest will accumulate on the amount you borrowed while you’re still in school, and you’re responsible for paying that interest from the moment your unsubsidized loan is disbursed.
To find out what you owe in federal loans, you can check your federal student loan balance at the National Student Loan Data System (NSLDS). The college you attended has sent federal loan information to the NSLDS and this central database stores that information so you can access it when you need it. It will also show you how much of your loan balance is subsidized versus unsubsidized, along with other types of useful information.
As far as private student loans, you’ll need to contact the lender that gave you the funds to find out how much you owe. If you borrowed from more than one private lender, you’ll need to contact each one individually.
Federal loans typically come with a six-month grace period. Be sure to check with each private lender, if applicable, to see if you have a similar grace period with them. Once you know your total balance, then it’s time to figure out some strategic ways to pay back the balance.
Federal Student Loan Balance
The federal government offers forgiveness programs, and if relevant to your situation, you may get a portion of your remaining debt forgiven—meaning, you wouldn’t have to pay it back. It’s important to check to see which federal programs currently exist and see if you may qualify.
One such program is the Public Service Loan Forgiveness (PSLF) Program where people who work in public service occupations may qualify for 100% forgiveness after making 120 on-time, qualifying payments.
To qualify, you would need to be employed full-time at an eligible governmental agency (federal, state or local) or at another designed organization, such as a 501(c)(3) nonprofit (not religious). If you believe you qualify, there is an employment certification form you’ll need to fill out each year and meet all requirements. It’s important to note here, however, that qualifying for these forgiveness programs can be quite stringent.
There are also income-driven repayment plans for federal student loan balances where payments are capped, based on your income. (If you intend to pursue the public forgiveness option, you must repay your loan using an income-driven repayment plan.) If you consistently make payments for 20 or 25 years, depending upon your modified agreement, any remaining balance could be forgiven. One potential flaw is that loan amounts forgiven under this program can be taxed as income, so you could end up with a large tax bill.
Here’s another idea. While the Standard Repayment Plan is the typical default repayment plan offered by the federal government, there are different federal student loan repayment options available that can have longer terms—but you have to request one. If you choose an option with a longer term, this will likely lower your monthly payment, but increase the amount of interest you’ll pay over the life of your loan.
More Ideas to Consider
It may not hurt to talk to your human resources department at work to see if they offer any student loan repayment benefits. The New York Times estimates that around 4% of employers are offering this type of benefit, up from 3% in 2015.
Plus, Forbes.com called student loan repayment benefits the hottest benefit last year, and notes that, to “attract and retain recent graduates, in particular, companies are expanding their employee benefit programs to help reduce student loan debt for their employees.” So, it’s possible that increasing numbers of employers will offer them (perhaps yours!).
And, although this may not be a huge cost savings, many lenders will give you a discount if you set up an automatic payment option. In addition, you could consider bumping up your payments when you can to help make a dent in your balance.
Because federal and private loans alike allow for prepayments without a penalty, any time you can pay more than the minimum amount, it helps to reduce the amount of interest owed over the life of the loan—and this can help you to pay your loans off more quickly.
Finally, here’s one more idea to consider: student loan refinancing. The act of simply refinancing your loans into one can add a helpful convenience factor, making it much easier to streamline your bills. And yes, you can consolidate all your federal loans into one with a Direct Consolidation Loan, but the rate is typically a weighted average of all the current rates on your federal loans, rounded up to the nearest eighth of a percent. So, you get the convenience factor (unless you also have private loans, which can’t be consolidated into a Direct Consolidation Loan!), but your interest rate may not be lower.
With SoFi, you can consolidate your federal and private loans, and refinance them into one low interest loan—although, in the interest of complete transparency, we strongly encourage you to explore your federal options before refinancing with a private lender.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.