With the costs of school steadily rising and the necessity of a college education growing even more ruthlessly, many people are choosing to take on student loans. These loans- designed to help people who can’t pay out of pocket get access to education- are a godsend to some.
Still, having a loan hanging over your head is no one’s idea of a fun time. For one, loans tie you to an institution and limit your freedom. You might also feel more vulnerable to things like market instability if your loans are high and your funds low. So, how long will that loan be with you? How long does it take to pay off a student loan?
What Is The Size Of Your Loan?
To figure out how long it might take you to pay off your loan, you should first consider how big your loan is going to be and how much you’ll be able to pay monthly.
Loans are paid off in small installments, with interest and possible fees tacked on. This means that if you have a loan of $30,000, you’ll be paying in small increments of that loan for a period of time.
If you can pay more per month, you’ll end up with a shorter time to repayment. This will also help you in other sectors of your financial help. Student loans may come with different terms and different interest rates, meaning that your loan time might vary depending on who you get it from and what kind of contract you sign onto.
Overall, if you’re able to make larger monthly contributions, your loans will dissipate much faster. Choose to pay them piecemeal, and you could be stuck with them for a much longer period than if you chose to take off big bites.
What Is The Term?
A loan term designates how long you will be taking to pay off any given loan. If your loan has a term of, say, 15 years, that means that your bank has set up your payments so that you will have paid off your loan in that among of time- plus interest.
Many student loans come with a term of about ten years. This means that students who start college in 2022 will optimistically finish off their loans somewhere around 2032- or when they’re 28 years old.
But this estimate doesn’t always pan out. Loan recipients often take 20 years or more to finish paying off their loans, which, again, will depend on how much they’re willing to pay and how much they can spare for their bank or loan service at the end of the month.
So, if you’ve got a loan of $30,000 with a term of ten years, you’ll be paying big parts of that loan every month- plus interest. If you’ve got the same loan with a term of 20 years, you’ll be paying much smaller rates- half as much.
Thus, how long a loan will last is a combination of term length and how much a debtor can pay.