This is a guest article by Jon Haver. If you are interested in contributing to Debt RoundUp, please follow our guidelines.
Photo via DonkeyHotey
By the time you graduate from college, you may have between $5,000 and $30,000 or more in student loan debt. With the average student loan debt now around $25,000 (for an undergraduate degree), today’s graduates can expect to spend 5 to 25 years or more paying off their student loans.
How old will you be when you finish paying off your student loans? The answer depends on a variety of factors such as the original amount of debt, your interest rate, the type of job you snag after graduation and other financial responsibilities that may arise, such as having a baby. (Congrats Grayson).
Interesting Stats About The Age People Are When They Pay Back Their Loans:
- President Obama was 43 years old when he finished paying off his student loans!
- More than 15% are still paying back student loans at age 50
- Senior Citizens owe 36 million in student loans
- According to this Study
To estimate how long it will take to pay off your student loan, use an online calculator such as this calculator from CNN Money. Enter the amount of your loan, your interest rate and your monthly payment amount to estimate how long it will take to pay off your student loans.
4 Factors That Will Impact How Old You Will Be When You Pay Your Last Dollar
One – Financial Responsibilities
Future financial responsibilities may affect your ability to quickly repay your student loans. Marriage, children, medical bills, car loans and mortgages are just a few things that you may run into in the years after graduation. With more financial responsibilities, you may have to lower your monthly payments – which will extend the life of your loan.
Two – Monthly Payments
The higher your monthly payment, the quicker you will repay. Lowering your monthly payments in times of economic hardship will extend the repayment time and only mean you will be older when you finally pay them off. A good rule of thumb is to pay no less than 8 percent of your monthly income. For example, if bring home $2,000 a month, your monthly payments should be at least $160. For a monthly salary of $5,000, set your monthly payments higher than $400.
Three – Repayment Plan
Your period of repayment also depends on the type of loan you received and the repayment plan you chose. For Direct Loans and Federal Family Education Loan (FFEL) Program Loans from the federal government, a standard repayment plan allows up to 10 years of monthly payments. An extended repayment plan, however, allows up to 25 years for repayment.
The images below show the difference between a 10 year repayment term and a 25 year repayment term.
Four – Amount of Debt
The more student debt you have the older you will be when you pay it off. The people with the most student debt, the “top” 1% have 150K+ in student loans and according to the Huffington Post they would need to earn $137,000 per year to pay off their student loans in 20 years!
So How Old Will You Be?
Many factors go in to determining how old you will be when you pay off you student loan. The original amount of the loan, interest charges, salary and financial obligations can have a huge impact on your ability to repay your loan. It could take 2 to 25 years to pay off our loans. To get started, use an online calculator to estimate the length of repayment and create a budget that will allow you to successfully pay off your debt in the time required by the terms of your loan.
This article was written by Jon Haver who writes at PayMyStudentLoans.com who after paying off his student loans wants to share tips and information to help others.
About Guest Author
I never had student loans but my wife did. When we got married we combined everything including assets and debt, so her student loans became ‘our’ student loans. This means that I didn’t even have any student loans until I was 33. At the rate we’re going (we’re not paying any extra since we locked in a fixed rate of 2.25% on them), they’ll be paid off when I’m 45 but since they’re my wifes, it probably makes sense to center them on her age, which would be 37.
Money Beagle recently posted..Pay Yourself First To Save Money And Enjoy Life
That is a pretty low rate, so I can see why you just let it go with the minimum payment.
We just paid off Greg’s this year and he is 33. We paid them off pretty fast but if we had made minimum payments it would have been another ten years or so!
Holly@ClubThrifty recently posted..Confessions of a Cheap-Ass Santa
Congrats Holly on getting them paid off.
OMG i dont want to think about how old I will be…My kids will definitely be in college when I am making my last payment. Right now our payments say for the next 20 years…so if that is correct ill be 50…eeek…
Christopher @ This that and the MBA recently posted..CouponChief: Find The Best CafePress Coupon Code
Sometimes that number is not something that you would like to see. The truth does in fact hurt sometimes.
Though not surprising, stats like this are always startling to me. I really wonder at times if the student loan industry will create the next bubble or not. We just finally got my loans paid off in January and I am 38, it was such as awesome feeling! Thankful to have it behind us.
John S @ Frugal Rules recently posted..Saving Money with Comparison Shopping
They are startling. Congrats on getting them paid off John. That is a huge accomplishment.
I would estimate that ours will be paid off in about 10 years. It depends, though, on our grad school situations. If I get an MBA I will have additional loans, though I will make 20k+ more right out of the gate. I might be too entrepreneurial for grad school, though. I’d rather spend my spare time trying to build a biz instead.
DC @ Young Adult Money recently posted..Online Strategies for Holiday Shopping Bargains
Good luck with it all David. I am sure you will figure out what will work best for you.
“More than 15% are still paying back student loans at age 50″ – WOW. Interesting statistic! Alarming…
I have about 2 more years to pay mine off, but I may pay them off quicker.
Veronica @ Pelican on Money recently posted..Powerful Lessons Learned in Starting an Online Store (Part 2)
It is alarming. Congrats on being close to paying them off.
I hope to have mine paid off in the next couple of years, so 40. I did go to school for 8 years, so didn’t get to start paying back until i was 26. The $30K in credit card debt we ran up didn’t help the situation either.
Kim@Eyesonthedollar recently posted..Hosting a Frugal, Rocking Holiday Party
Yeah, I can understand having to deal with one over the other first.
I’ll be 29. Fingers crossed, but seeing how I finished grad school at 27, that’s not too bad.
Marissa @ Thirty Six Months recently posted..On Momentary Escapes
That is really good Marissa. Congrats on getting it taken care of.
Ugh I hope my loans are paid off by my 40th birthday
(when I say loans I mean government issued loans and all LOC’s too). I haven’t done the math but I’m thinking it will take 10 years to pay everything off (about 70k)…so i’ll be 38.
Catherine recently posted..$100.00 Giveaway!! When There Isn’t Enough Money at the End of the Month
Good luck with it all Catherine. 70k is a lot of pay off, but you will get there.
This is a lot like the decision to pay off your mortgage early. Fortunately, with the U.S. government now making rates more affordable (I have some friends who just consolidated their loans with nearly 3-4% interest rates). Unfortunately, schools are increasing their tuition at astronomical rates. I don’t think people realize this, but there are a lot of other factors that are contributing to these increased costs: mismanagement of state budgets (I live in California, where every citizen and employee wants to tax employers because they think it won’t affect their own pocketbook), the number of families that abuse the system and take advantage of benefits without paying into the system in anyway (not a large percentage, but the rest of us are paying the price for those that do), etc. Best advice to young students is work hard and do well in school, get scholarships, go on to a graduate program (doctor, lawyer, accountant, engineer), live under your means and don’t get caught up in spending for the sake of “status”, and pay off your debt as fast as possible.
[email protected] recently posted..Highest Paying Jobs Without A College Degree
Spouse and I were 37 years old when we finally got all of our undergrad/grad school loans paid off. That was 9 months before our first born went to college (debt-free ’cause we had been there and done that – really didn’t want to see her have to do that). We got her paid for (including her wedding, help with a down payment on their first house and lots and lots of help with their little ones). During that time we got our son thru undergrad (als debt-free) and now it really is time for us to polish off this mortgage and fully fund our retirement. We’ve been paying for higher edcuation for over 30 years (one way or another) and we’re sick of it. We’re not doing 529′s for our grand kids. Their parents have been well provided for and they can take care of that. Finally – we are finished with student debt – forever (I hope).
Thanks for stopping by Jim and providing some insight into your student loan debt. I think you have it figured out now. Good luck!
Some people refinance simply to make the monthly mortgage payment more affordable. A lower interest rate and/or a longer loan term both work toward lowering the monthly payment. As long as the homeowners understand they may not be minimizing total interest expense, affordability can be a motivation for extending the loan term.
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