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With students graduating with an average student loan debt of nearly $30,000, many are left wondering how they’ll pay off their student loans.

Students have to sort all of the interest rates, payments, scheduling and other, finer details just to find out how much their monthly payments will be. It’s hard to plan when you have no idea what your average payment will amount to.

If you don’t fully understand the details of your loans, it can add more stress on top of the fact that you actually have to pay them off. Looking at that figure as one lump sum can be intimidating, and frankly, a little frightening.

But don’t worry. Credible created a detailed guide of what the actual cost of a $30k loan is on various payment plans. Getting a glimpse into the average student loan payment can give you a clearer picture of what you actually owe, and what it will take to begin paying the loans back.

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Standard Repayment Plan

$30,000 Principal Amount; $50 Minimum Payment

Standard repayment plans are the default status on loans, unless otherwise specified. Standard repayment plans have minimum monthly payments, usually around $50. With the average student loan debt of $30,000, interest on a loan can add up quickly, so you may want to pay more than the minimum due.

Your monthly payment and total amount paid over the course of the loan will depend on your interest rate. Let’s look at some standard interest rates.

Federal Direct Student Loan, 4% interest rate – Average monthly payments

At this interest rate, your monthly payment would come to $304 per month. The total interest paid over the course of the loan would be $6,448, bringing the total amount paid to $36,448. The repayment period on standard loans is 10 years, or 120 months. Let’s see another example with a higher interest rate.

Federal Direct Student Loan, 6% interest rate – Average monthly payments

At this interest rate, your monthly payment would come to $333 per month. The total interest paid over the course of the loan would be $9,967, bringing the total amount paid to $39,967. The difference in total amount paid between these two loans would be $3519 over a 120-month period. That’s an extra $29 per month. In order to have an equivalent total amount paid compared to the first example, you would have to pay $2,650 towards the loan initially before interest applies.

Income-Based Repayment Plan

$30,000 Principal Amount; 4% Interest Rate

The income-based repayment (IBR) plans are only available to qualifying graduates. This repayment plan takes a percentage of your discretionary income and uses it to payoff the loan.

The monthly payment will depend on your income. For those who are new borrowers, they will pay up to 10% of their discretionary income but never more than the 10-year standard repayment plan monthly amount. The median income for a college graduate in the United States is around $47,000 per year. Let’s look at two different incomes.

Average monthly payments on $47,000 per year income

At this income rate, your monthly payment would be between $245 and $304 per month. The total interest paid over the course of the loan would be $7,141, bringing the total amount paid to $37,141. The repayment period in this case would be 128 months, or 10 years and 8 months. Compared to the first standard repayment plan example, you would be paying a little less per month but a little more overall.

Average monthly payments $35,000 per year income

At this income rate, your monthly payment would be between $145 and $304 per month. The total interest paid over the course of the loan would be $11,366, bringing the total amount paid to $41,366. The repayment period in this case would be 177 months, or 14 years and 9 months.

This is an additional $4,225 in total compared to the higher income example and $4,918 compared to the standard repayment example. Although this plan costs more in the long-run, it may be a better option for those with low income. If your income is too low, you may not be able to afford the standard repayment plan monthly amount.

Average Student Loan Payments – Key Takeaways

In conclusion, different payment plans are clearly better for different borrowers personal situations and it’s most important to understand the different options before choosing a path.

A good rule of thumb is that the longer you stretch out your loan payments, the more you’ll repay in total (see “Why WOULDN’T I want to lower my monthly student loan payments?“).

Some borrowers may have so much debt that they qualify for loan forgiveness after 10, 20, or 25 years of payments. But loan forgiveness granted after 20 or 25 years in an income-driven repayment program is currently considered taxable income, so be sure to factor that into your calculations (loan forgiveness granted after 10 years of payments under the Public Service Loan Forgiveness program is not taxed).

For borrowers who don’t expect to qualify for loan forgiveness, refinancing with a private lender to reduce your interest rate can save thousands of dollars over the life of your loan.

For more on government repayment plans that are available to you, including IBR, PAYE and REPAYE, and refinancing options with private lenders, see:

*All calculations were made using the Credible’ student loan calculator.

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