$100k Student Loan Monthly Payment
The average student loan debt in America is more than $30,000. Ouch! And if you owe more than that amount, you’ll need to think about how you’re going to pay it off.
But don’t worry: there are plenty of repayment options available for people with high balances. In this post we’ll explain how some of these plans work—and what they can mean for your monthly payments and overall financial health. We’ll also discuss ways to avoid getting into debt in the first place!
According to a recent Forbes’ article, there are currently over 44 million borrowers in the U.S. who owe $1.46 trillion in student loan debt. This is more than twice the amount owed just 10 years ago.
According to a recent Forbes’ article, there are currently over 44 million borrowers in the U.S. who owe $1.46 trillion in student loan debt. This is more than twice the amount owed just 10 years ago.
The average borrower owes more than $32,000 and it’s estimated that this number will reach $38,000 by 2022! And if you think your average monthly payment will help you pay off these large amounts of debt faster, think again: The average monthly payment for borrowers with outstanding balances was $393 at the end of 2016 (the most recent data available). That’s an increase from $380 just one year earlier—and that’s not good news for anyone with loans coming due soon.”
What if you owe $100,000 or more in student loans? If you have a federal student loan, you’re probably on the standard 10-year repayment plan. If your loans are at 6%, you would be looking at a payment of roughly $1,110 per month.
The standard 10-year repayment plan is a good place to start. If you have federal student loans, it’s likely that your payments are set at a fixed rate of 6%, and that’s what I used for my math below. If you have private or alternative loans, your interest rate may be much higher than 6%.
If you’re on the standard 10-year repayment plan, with $100k in student loan debt and an interest rate at 6%, then your monthly payment would be roughly $1,110 per month.
However, if you have private student loans, there’s a chance that your lender might not offer any repayment option that has a term less than 10 years. In this case, you could end up with monthly payments of about $1,250!
You may have heard that federal student loans are a better deal than private ones. While this is true in most cases, it’s not always the case. You see, federal loans are eligible for some types of repayment plans that could help you save money or pay off your debt faster than if you used a standard 10-year plan. Private student loans don’t offer those options—which means that if you have one, it will be harder to reduce your monthly payments over time and avoid paying more interest than necessary as a result.
If you have a large amount of student debt and want to get out from under it as soon as possible (or even before then), there are certain things you can do right now to start saving money on interest payments today:
Let’s say you have $100,000 in debt with a 30-year term and a fixed interest rate of 6%. Your monthly payment will be reduced to around $600!
Let’s say you have $100,000 in debt with a 30-year term and a fixed interest rate of 6%. Your monthly payment will be reduced to around $600!
This is great news, because it means that your student loan debt will not take up as much of your paycheck. However, this also means that you will pay more in total dollars over time because you are paying less each month. In addition, your interest rate is higher than if you had gone for an adjustable rate loan.
That being said, if the alternative is paying off your loans in ten years or less instead of 30 years (or possibly never), then taking out a longer-term loan might be the best way forward for some people who want their loans paid off completely by retirement age.
Even though this sounds great on the surface, keep in mind that you will end up paying twice as much interest since your loans will be stretched out over twice as long.
Even though this sounds great on the surface, keep in mind that you will end up paying twice as much interest since your loans will be stretched out over twice as long. The longer a loan is outstanding, the higher your balance will become and the more money you’ll owe when it’s all said and done.
The Department of Education offers many repayment plans to borrowers who can’t afford their monthly payments. If you’re in a situation where you don’t know what to do with your student loans or which repayment plan might work best for your budget, contact them at 1-800-4FEDAID (433-3243).
So what do you think? Are monthly payments that much better than paying off your student loans quickly? Or are they just setting you up for failure down the line? The truth is that there isn’t really one right answer here, because everyone’s situation is different. However, we hope that this article has given you some food for thought and helped guide your decision-making process when it comes time to make a decision about repayment options on your own loans!