What Is the Average Student Loan Repayment Period?

Student Loans- What is the average repayment period?

Student loan debt has now reached a total of over 1.7 trillion dollars. Although there are several different re-payment options associated with student loan debt, the standard repayment schedule is generally presented as 120 months or 10 years. However, the true student debt average re-payment period for a bachelor’s degree today takes just over 21.1 years to pay off.

College graduates regularly believe they will repay their education debt in ten years or less but statistics show this is not typically the case. Students that take out debt for higher education are almost always underestimating how long it will take to repay the money they borrow. The result is college graduates that time and again must put their life on hold to climb out of a mountain in student loans.

A steady increase in college costs and the desire of more young adults to obtain higher education is only adding to the student loan problem. Higher education costs and job market prospects after graduation are also only adding to the increasing time it takes many students to repay the money borrowed for a college education.

How bad is the student loan problem?

The growing student loan debt problem has only gotten much worse over time. Today, the average student loan is $32,731. According to Student Loan Hero, 69% of college students in 2019 took out student loans. Over the last two decades, average student loan debt at graduation has increased by 86% for a Bachelor’s degree.

Student loan debt in the United States might reach $2 trillion dollars in the next 36 months, according to some analysts on the subject. As college costs continue to go up and more students take out money for higher education the problem is only going to get much worse. Although $30,000 is about the average amount of a student loan, it is not uncommon to hear of some students with 50k or even 100k in debt.

The amount of outstanding student loans in the US is the second-largest consumer debt behind mortgages. Previously auto loans took second place. The real trouble with student loans is not just the amount of debt but also the rate of default. The Consumer Financial Protection Bureau released a report finding that one in four student loan borrowers are in default or having a difficult time with repayment.

Why is the average repayment period for student loans often much longer than 10 years?

The repayment time frame for student loans is frequently much longer than 10 years. This is not surprising due to an increase in the cost of higher education resulting in a larger loan balance for college students. In addition, the job market for college grads is often viewed much more favorably in the eyes of students as they tend to have a positive outlook that higher education is a guarantee of a better career and financial future. Young adults are taught from an early age that college is a promise of a good-paying job. A college degree has never assured success, but the odds were much better in the past than they are today.

A high student loan balance is increasing the repayment period.

Although wages have increased over time, the cost of a college education has soared. Take for example a study by Student Loan Hero that found four-year public college tuition has increased 571% since the late 1980’s. Even taking inflation into consideration, the increase has been 213%. The higher prices for private universities have done a little better with an increase of 129% over the last three decades.

Average College Cost Tuition and Fees 1989-2020

Tuition rates tend to increase at about twice the rate of inflation. The average increase is around 8% per year. This means the cost of college doubles about every nine years.

Tuition is rising and wages are not.

Tuition for college and the money people are earning has gone up over time. However, there is a large discrepancy between the amount each of them has increased. Although the news most recently up until the pandemic was a rise in wages for most Americans, this has been anything but the entire story. The truth is many Americans have seen an increase in pay, but when the cost of living is added the gain in a paycheck at work is often flat or even lagging.

Americans have seen an increase in pay but often an even larger rise in the cost of living.

The truth is most American families have not seen much of an actual increase in wages since the 1990’s. Not only has the cost of higher education gone up faster than most people earn, but so has things like medical care and housing. Average income families are seeing an increase in the money they bring home, but they are also seeing a larger growth in expenses.

When it comes to the tale of people earning more money you only need to look as far as the increasing cost of medical care. As companies are cutting back their contributions to employee healthcare, workers are being required to pay higher premiums and deductibles. It is not uncommon for many families to be paying $10,000 a year or more in medical insurance premiums and deductibles.

The higher cost of tuition and flat wages for many families is making it much more challenging for them to make a financial contribution to a child’s education. The result is more students having the need to take out loans and more of them to get a college education.

For young adults that graduate college their earnings are also not quite enough to rapidly pay down any school loans after graduation. A study by Pew Research found that American paychecks are much bigger today, but the purchasing power it provides has hardly moved. With a college education being more expensive and more students having to take on larger amounts of student debt, the time to pay the money back is only getting longer.

Why are college costs increasing so fast?

The increasing cost of higher education is due to several different factors. Some of these are easier to identify than others. However, there is one undeniable consideration and this is the fact there is clearly a problem with the cost of a college education.

A Cut in Funding

One of the claims for higher college costs is a reduction in federal and state funding for universities. This can certainly be understood as the trend for most businesses and even the government has been to cut costs on just about anything they can over time. The only difference is sometimes cost-cutting by the government is not done in the publics’ best interest. This is likely the case when it comes to funding education.

Supply and Demand

Supply and demand are another story used for the rising cost of getting a college degree. So many young adults today are deciding to go to college and this is raising the costs with more students attending. Young adults are still being taught today that a college education is the only path to success. Although this isn’t necessarily any longer the case, a must-have college degree is putting more young adults in debt.

Students are Taking Longer to Graduate

The time it takes a college student to graduate can really impact the amount of debt. Although a bachelor’s degree is so often thought of as taking four years to complete, the reality is graduation is taking much longer. According to the National Center for Education Statistics, 59% of students take at least 6 years to graduate. This leaves only 41% graduating in just four years.

59% of Bachelor's Degree Seeking Students Take At Least 6 Years To Graduate

Students Don’t Finish

It might be difficult to believe, but according to the National Center for Education Statistics, about 40% of the students that enroll in college will not graduate. This includes many of them that took out student loans in the hope of a college education. The problem with student loans in a non-graduating scenario is there is not any benefit in most cases of only attending college without graduating.

Depending on the amount of money borrowed and the employment prospects for someone that decides to leave college prior to graduation will determine the amount of time to pay back any loans. This often ends up being much longer than anticipated.

Federal Funding Limits and Student Aid

Probably one of the most disturbing reasons that some economists have discovered when it relates to rising college tuition is the availability of student aid. Unrestricted access to federal student aid has shown to motivate many universities to raise their costs. It appears that when there is more free money for students in the form of grants and scholarships that tuition prices rise.

Even more troubling is there does appear to be a link in rising college costs when the limit on the amount of federal student loan money that can be borrowed is raised. This money is not free but lent to college students for their education. It is money that needs to be paid back at some point and universities are using the opportunity of an increase in the availability of student loans to raise their tuition.

What are the answers to reducing the average student loan repayment period and the amount of money borrowed for an education?

College Needs to Be Affordable

The obvious answer to getting the cost of a college education under control is to make it affordable. This is easier said than done as the demand for getting a college education keeps increasing. Moreover, the answer likely does not fall with free college for everyone at the expense of the taxpayer.

College Is Not for Everyone and It Shouldn’t Be

One of the first steps in making college more affordable and loan repayment periods shorter is to drop the high demand. Not everyone is going to be a good college student and not everyone needs to go to college in order to have a career along with financial security. There are a lot of choices that can work out well for a career without the need for college. Attending a trade school or even just some two-year college programs can provide a good living.

Taking on a mountain of student loan debt today is a much larger gamble than it ever has been. Young adults need to stop being told from a young age that a four-year college degree is the only path to success. Kids need to be educated about other career choices that might be just as good or better that do not involve decades of debt.

The College Experience is Not an Entitlement

With the longstanding traditional stories of college being the only path to success also comes the expected entitlement for the college experience. So many parents and students feel that a college experience is a rite of passage. A life experience that young adults should have. The problem is this often comes at a price. This is the price of student loan debt that can last for decades.

The big 4-year university experience and living away from home is what so many people envision for the college experience. This needs to change. More people need to see that often a community college for the first two years of education can be less experience. Furthermore, more people need to understand that attending a community college is not a lower form of education or for poor-performing students.

Attending a community college for a lot of students would provide an alternative to the amount of debt many univeristy students end up with. The difference in cost has the potential to be substantial and some students might even be able to avoid college loans entirely. Community colleges still seem to have a large negativity attached to them and much of it is entirely false.

The Goal of Higher Education Shouldn’t Be to Just Get a Degree

Decades ago, just getting a college degree had good odds of having an advantage and landing a good career with high earnings. The odds today are not quite as good and this is often why taking on a mountain of student loans is a bad idea. Student loan repayment periods were much more standard at one time in the range of a 10-year repayment schedule. Today with student loan repayments averaging 20 years or more the stakes are much higher.

The goal of getting an education in college is still not a bad plan. However, if decades of student loan debt are accumulated in the process, the result has the potential to lead to disaster. With employer loyalty at all-time lows and much of corporate America looking to always cut costs, job security is a real risk for college graduates. According to the Bureau of Labor Statistics, the average worker will have ten different jobs before age 40. This number is projected to only get bigger. Today’s younger workers will likely have 12 to 15 jobs in their lifetime.

There is a real possibility for many college graduates today to be either unemployed or underemployed at some point in their careers. Having decades of student loan debt will only add to the stress. The goal for higher education today shouldn’t be to just get a college degree at all costs but to graduate debt-free. Graduate debt-free even if it might mean taking a little longer to finish. For many college students graduating debt-free today will likely be more valuable than leaving college with decades in student loans.

Being debt-free creates choices. Decades of student loan debt might be able to be paid off, but the odds of the gamble are just not as good as they once were.


Although student loan debt is often thought of as a 10-year repayment period, the data shows the time to pay back money borrowed for college averages over 20-years for a bachelor’s degree.

College graduates regularly underestimate the time it will take to repay any money they borrow for their education. With 69% of college students taking on student loans and having an average balance of just over $30,000 at graduation, it can take decades to repay the money borrowed for an education. The rising cost of higher education, flat wages and an increase in the cost of living are only going to increase the time it takes for many college students to repay their debt in the future.

There is clearly a student loan crisis in America and the problem is quickly approaching $2 trillion dollars. Changes need to be made. If not, the average repayment period for higher education loans is only going to get longer.


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