HOW LONG DOES IT TAKE TO PAY OFF COLLEGE LOANS?
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Future students have a lot of decisions to make when deciding on what post-secondary education to pursue, and paying off college loans in the future is increasingly becoming one of the biggest considerations to take into account when choosing a school. The cost of college tuition, room and board, fees, textbooks, and other necessities has been increasing, and future and current students look at different options for covering those costs.
Tuition and Other Education Costs
Tuition costs can vary greatly, and part of the variance is dependent on what type of college or university a student attends. According to the U.S. Department of Education National Center for Education Statistics, the highest tuition costs will be paid at private not-for-profit institutions and the lowest costs will be incurred at public institutions.
The size and prestige of the educational institution can also sometimes be indicative of cost, particularly for public universities. For example, students pay considerably higher tuition costs at large state universities than community colleges, which are smaller. Additionally, tuition at Ivy League and Big Ten schools are much higher than the averages for other universities.
Student and Private Loans
Students and parents have a number of options for financing the tuition and other costs of a collegiate education. The most popular of these options are federal student and parent loans. Understanding the basics can be helpful for determining which type of loan is the best fit.
With a subsidized loan, interest does not incur while a student is attending courses; with an unsubsidized loan, interest does incur while a student is in school. With all student loans, interest rates depend on the date of loan dispersal and the amount oft he loan. For current loan interest rates and information on fixed rates, please visit the American Student Assistance Organization.
Average Costs and Loan Repayment
On average, students can expect to spend a national estimate of approximately $22,000 per year on an undergraduate post-secondary education. If the student is in school for four years to complete a degree, the total cost will be around $88,000. If the entire amount is financed in loans at a fixed interest rate of 5.75 percent, the total cost of the loan would average out to approximately $147,000. For more information on calculating the total cost of a student loan, visit the Sallie Mae student loan calculator.
Common re-payment options include the deferred plan, where students do not pay back any principal or interest on the loans until after graduation. After graduation, students can choose from several options, with the most common re-payment schedule ending after 180 or 218 months, or 15 to just over 18 years. Some loan re-payment options can be spread to as much as 25 years, however.
The financing of a college education is a big part of a student's decision regarding which college and program to choose. To make the best decision for each individual student, understanding the amount of time it will take and the total cost of paying off college loans is essential.
Resource: The Ultimate Guide to Affording College
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