A plan to study abroad requires a plan to fund your studies. After exhausting all your scholarship grants, savings, and financial assistance from your own family, your next and final option is to take out a student loan. But how long will it take you to pay off your student loans?

Before applying for a student loan, ask yourself: Do I want to spend the rest of my life paying off my student loans? Quick answer: You don’t. 

How Long Will It Take You To Pay Off Your Student Loans?

To fill the gaps in your funding needs, consider taking out a loan, but don’t jump into one without considering the repayment plan. 

Estimated Repayment Length Based on Repayment Plans

In general, there are two types of student loans available for international students: federal or government-funded student loans and private student loans. 

Federal or government loans usually have a payment tenure of 10 years. If you have a private student loan, the repayment plan depends on your agreed terms, but it generally lasts for 10-25 years.

To give you a better idea of the length of time it takes to pay off government student loans, here are the different types of loan repayment plans.

Standard Repayment Plan – In a standard plan, a borrower needs to pay a fixed amount for their loan 10 years. If you have a Direct Consolidation Loan, expect the repayment plan to last up to 30 years.

Graduated Repayment Plan – In this plan, payment must be completed within 10 years. The payment amount under this loan starts low, then gradually increases every two years. 

Income-driven Repayment Plan – As the name suggests, payment under this plan is based on income and family size. Depending on the loan that you took out, you may only have to pay for 20-25 years, and the remaining can be waived.

Extended Repayment Plan – The payment period lasts for about 25 years, with fixed or graduated payments. 

Average Time for Repayment of Student Loans

Aside from the original loan amount and repayment plan, something that could also influence your payment period is the interest. Interest rates vary depending on the loan plan, but one thing is constant – they all accrue over time. 

Ultimately, students end up paying more because of interest. This prolongs their student loan repayment schedule.

In information provided by Education Data, some professional graduates in the United States spend more than 46 years paying off their education loan entirely. That is more than half of their lifetimes. They also end up paying more in interest than what the loan was originally worth.

The same research organization also reported that up to five borrowers see a spike in their loans in the first five years of their repayment plan. As a result, it takes over 20 years before an indebted student fully pays off their loan. 

In a 2013 survey conducted by One Wisconsin Institute, it was found that the average graduate of a bachelor’s program takes about 21.1 years before being able to pay off their loans. 

What this indicates is that students taking out a loan should consider not only the repayment plan. They should also take into account the interest rate of the loan to get a more accurate estimate of the time needed to pay it off. 

Using a Loan Calculator 

Using a tool such as MSM Unify’s education loan calculator can help you compute how much to pay monthly so you can pay off your loan within the loan term. Loan calculators factor in the loan amount, loan term, interest rate, and monthly prepayment to give you the total amount you need to pay monthly. 

Using a loan calculator allows you to set up a repayment plan, so if you want to finish paying off your loans in only 10 years, you’ll know how much to set aside every month for loan payment. This will help you make sound financial decisions so you can pay off your loan on time. 

Don’t celebrate your graduation worrying about your student loan debt. Know how long it will take you to pay off your student loan, and you’ll be able to find ways to manage it. Check out our articles here on MSM Unify for more information and tips about education loans.

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