Published in: Student Loans | Oct. 28, 2019

Here's the Average Student Loan Payment -- and How to Lower Yours

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Are you paying more per month than you need to?

The average student loan borrower pays $393 per month, according to the Federal Reserve. This includes borrowers on all repayment plans but doesn't count those whose loans are in deferment or forbearance.

However, there's a big caveat to this number. For one thing, this is an average of all student loan borrowers, from recent grads to those who are still paying their student loans from decades ago. The average graduate's student loan debt has risen significantly over the past few decades, and now stands at more than $30,000. So it's fair to say that the average student loan payment for a recent graduate is likely to be higher than the overall average.

A young woman with a laptop and crumpled papers on her desk.

Image source: Getty Images

It's also important to realize that this is just the average. It includes people who graduated with just a few thousand dollars in student loans and also includes people with professional and graduate degrees who have student loan tabs that are well into the six-figure range.

With that in mind, if your own student loan payments are a bit too high for comfort, there are several ways you might be able to lower your monthly obligation.

Options to lower your student loan payments

If your student loan payments are a bit too high, and you have federal student loans, there are three main ways you might be able to lower them -- extended, graduated, and income-driven repayment plans.

  • Extended repayment plans: Extended repayment plans are available to borrowers with more than $30,000 in federal student loans, and as the name implies, they extend your repayment length from 10 years to as many as 25 years, thereby lowering the amount you'll pay each month. This is similar to the difference between a 15- and 30-year mortgage -- the longer one has a lower monthly payment, but you'll end up paying more interest over time.
  • Graduated payment plans: This is a 10-year repayment plan, but it is also available with the extended repayment term that I just discussed. This plan has a payment that starts out low but increases every two years. The idea is that this will keep your payments low while you're just starting out in your career and will increase as your salary (hopefully) goes up over time.
  • Income-driven repayment plans: Last but certainly not least are income-driven repayment plans. These come in a few different varieties (see our guide to the four types of income-driven plans), but the basic idea is that these plans cap your student loan payment at a certain percentage of your discretionary income. Another key point is that unlike the extended and graduated plans, income-driven repayment plans are eligible for the Public Service Loan Forgiveness (PSLF) Program and all have provisions wherein any remaining balance is forgiven after 20 or 25 years.

It's also worth mentioning that if you have private student loans, you may also have ways of lowering your payments, but these can vary significantly between lenders. For example, some offer a variety of repayment term lengths to choose from, but you'll need to check with your lender to find out which particular options are available to you.

If your student loan payments are too much of a burden, look into your options

The bottom line is that if your student loan payments are putting too much financial strain on you, then it's a smart idea to look into your options. More than $211 billion of the federal direct loans are currently on standard repayment plans, and those borrowers would almost certainly lower their payments by choosing one of the other repayment options I mentioned. Even if you already use one of the alternative payment methods, it's worth comparing what your monthly payment would be under the other choices.

To be clear, if you can comfortably afford to make your student loan payments, it's not necessarily a good idea to switch your repayment plan just to lower your monthly obligation. The less you pay each month, the more interest you're likely to pay over the long run. However, if your student loan payments consume too much of your paycheck, there are alternatives.

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