How Long Does It Take to Pay Back Student Loans?

Standard Repayment Plan

The length of time required to pay back a student loan depends on a number of factors, including the specific repayment plan selected, the amount owed and the amount of each payment. Although there are a number of repayment options that offer lower payments over an extended period of time, the standard repayment plan collects a slightly higher monthly payment amount in order to cut interest costs and complete repayment of the loan in the shortest time possible. Under the standard plan, students make equal payments over a period of 120 months, or 10 years. The minimum payment amount is $50, though, so students with a very low loan balance may repay the loan in a shorter time frame.

Extended Repayment Plan

Students who have more than $30,000 in student loan debt may extend their repayment period in order to have lower monthly payment amounts. If the student meets all requirements for the extended program, including the $30,000 minimum debt amount, the creditor may grant a repayment period of up to 25 years. This arrangement does offer a lower monthly payment amount, but it results in a higher total repayment because interest is accrued across the entire 25-year term; for this reason, students who are able to do so are encouraged to either select the standard repayment plan or to pay more than the minimum amount due each month.

Graduated Repayment Plan

Some students want to start repaying student loans with lower monthly payments, but expect to be able to pay more as they settle into their careers. To accommodate these students, student loan creditors offer a 10-year graduated repayment option. Like the standard repayment plan, the graduated plan spreads payment out over a 10-year period. Unlike the standard, plan, though, the graduated plan distributes payments in a manner that is more heavily weighted toward the end of the term (in short, students may have lower payments in the early years of the repayment plan and significantly higher payments toward the end of the plan).

Special Repayment Plans

In 2009, government officials approved special repayment options that allow students to repay only a portion of their debt. These programs, known as income-based repayment and income-contingent repayment, allow students who make payments for 25 years to write off remaining balances after completing the full repayment term if their income is not sufficient for repayment to be considered “affordable” (under complex guidelines defined by the government). In addition, graduates who take jobs in the public service sector can have some or all of their debts forgiven after 25 years of repayment (one special program, known as the income-sensitive repayment option, offers debt forgiveness after a minimum 10-year term). For full information on the special repayment plans available for some students, consult a qualified student loan adviser.