Average Student Loan Payment varies greatly among people of different debt and income levels. Usually, lump sum payments are uncommon and tend to only occur if student loan deferment has been granted. Instead, students pay off their loans in regular, installment-based installments. It is a common misunderstanding for some people that consolidation means a balloon payment that will be much more costly than any other arrangement. This is simply not true. In fact, there is no balloon payment involved whatsoever, as consolidation loans typically set a monthly payment that is at least slightly lower than the balance of the borrower’s loans.

Of course, the interest rate on a consolidation loan will be much higher than it would be for a conventional refinancing of an existing loan. However, even these high rates are still nowhere near what the average student borrower will pay on his or her debts over the course of the past twenty years. Indeed, the average student loan payment today is significantly less than it was just a short time ago. This gap has a lot to do with the changes that have occurred within the student debt industry itself.

First, there are currently far more borrowers owing more money than ever before. At the start of the Great Recession in 2021, there were just 5.5 million American students who owed more than ten thousand dollars on college loans. Today, this number has risen by a stunning fifty-five percent. Those students who owe more than ten thousand dollars on their college loans are categorized as “secondary debtors.”

Second, the amount of debt incurred by today’s graduates is much more varied than it was just a short time ago. As tuition costs have soared over the past decade, higher education has become not only a necessity but an elective. There are now more graduates with both full and part-time jobs. At the same time, there are also far more young adults with families earning substantially more than the average adult. In addition, many of today’s graduates are coming from families where only one parent is working full-time and the other has a college degree.

Finally, while scholarships and federal loan programs helped to swell the pool of available money for college, there are now far more graduates with neither a scholarship or a loan to repay them. At last count, there are only a few dozen scholarship programs to help graduate students with both personal and financial needs. There are even fewer federal loan programs to help current grads with their post-graduation living expenses. This means that students today must come to terms with the reality that they will have to make significantly higher monthly payments as they move through their careers.

Now consider the number of degrees that are being offered at prices that are increasingly more than three times the average student loan payments made over the life of the loan. For a person just earning a bachelor’s degree, this is a staggering $73,000. That is an incredible amount of money – more than double the typical full-time wage earner’s annual income! This means that there are enormous opportunities for the ambitious and disciplined individual who is ready to pursue a high-paying degree while paying down his or her student loans in five or ten years.

If you are thinking about refinancing your private student loans, it is important to realize that the federal government does not offer such a program. At best, the department of education offers a refinance loan option that can save you thousands of dollars on interest rates on the same loans that you took out in the first place. But there is no such program available to graduates with just a bachelor’s degree. The good news is that if you do qualify for a federal loan refinancing plan, you may be able to find one that will help you reduce your overall debt burden by hundreds of dollars per month.

The federal student loans currently offered have a much lower average loan to graduate debt ratio than any private lenders offer. On top of federal refinancing options, borrowers who owe more than the average can also consolidate their private student loans with the help of an online loan refinancing company. By doing so, they will only have to make one monthly payment to the company instead of several. When compared to the combined amount that graduates owe on their six-figure private lender loans, this savings can become quite substantial. And since many graduates are eligible for federal refinancing, these savings can add up quickly.