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If you’re feeling as if your student loans are hard to manage, you’re not alone. Currently, more than 43 million Americans are grappling with student loan debt, and the amounts they carry aren’t small. The average amount of federal student debt per borrower is $37,338, and for those with private student loan debt, the number is $54,921.

That kind of steep debt can be a challenge to pay back. In October of 2023, as the pandemic-driven freeze on loan repayment expired, a whopping 40% of borrowers missed payments.

If your loans feel like a real challenge to repay and you’re stressed about your financial situation, take heart. Not only are you far from the only person out there with this issue, but there are also a variety of ways you can get help with student loan debt. Here, you’ll learn more about those resources and steps you can take. Remember, you can and will get through this challenging moment. Now, read on for some guidance.

Where to Start

If you’re finding it hard to manage your student debt, your best first step may be to contact your loan servicer. Both the federal government and many private lenders assign a student loan servicer to each borrower. You can think of these servicers as go-betweens who monitor accounts, keep track of payments, and help borrowers maintain their accounts in good standing and switch plans, if need be. You can find your federal student loan servicer by logging into your student aid account; if you have private student loans, ask your lender how to make billing inquiries.

Student loan servicers can help you understand your options if you are finding your current loan hard to pay off. But do educate yourself before calling your servicer, because they are loan professionals vs. advocates for borrowers. It’s possible that they may offer options that are not necessarily in your best interest.

However, there is likely considerable value in hearing what alternatives are available so you can begin getting help with your student loan debt. You’ll learn more about options below.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

What to Do If You’re in Default

When you default on your student loans, it means you are not repaying them according to your schedule. Almost 10% of borrowers can find themselves in default within the first three years of repayment.

When you first miss a student loan payment, your loan is considered to be delinquent, or late. The exact definition of being in default will depend on the kind of loan you have. Here are some guidelines:

•   If you have federal student loans, you are considered to be in default when your payments are 270 days (or about nine months) late. With Perkins loans, you can be in default as soon as you don’t make a payment on its due date.

•   For private student loans, many lenders consider a loan to be in default at the 90 day or three-month mark. Policies do vary, so check your loan’s promissory note for details.

You can find out if you are in default by contacting your loan servicer. If you are indeed in default, the consequences can be serious. The full amount of the loan becomes due ASAP. The loan holder can take other funds from you, late fees and interest can accrue, and your credit score can be negatively impacted, among other impacts.

Yes, that sounds scary, but this is a situation to be worked through; don’t let it define you or make you feel panicky. You might research the Fresh Start program for federal loans in default, or look into a student loan settlement, which would allow you to pay back less than what you owe. Student loan rehabilitation is another path and can be a one-shot solution to get federal loans out of default, repay them at a reasonable rate, and help build your credit score.

If you have private loans that are in default, it can be a wise move to speak to someone who specializes in student loans at the National Association for Consumer Advocates. You may then get assistance finding out if you can get a student loan settlement (that is, pay less than the full amount you owe) or find another road forward.

Next, though, learn about ways to avoid reaching the default stage if you are having trouble with your student loan debt.

Ways to Lower Your Federal Student Loan Payment

If you’re struggling to make your monthly federal student loan payments, it may be worth taking a look at your loan repayment plan. Federal student loans have several different loan repayment plans available, which may offer different monthly payment amounts based on your discretionary income and other factors.

Choosing a federal loan repayment plan that could give you a lower monthly payment, if available, could help you more easily make your monthly student loan payments. Consider these options.

Recommended: What Student Loan Repayment Plan Should You Choose? Take the Quiz

Income-Driven Repayment

You may have been placed on the Standard Repayment Plan when you graduated, which is the standard for students repaying federal loans.

Under this plan, you have 10 years to pay off your student loans, and you make a fixed payment amount each month in order to ensure that your full loan is paid by the end of the 10 years. This plan may have higher monthly payments than other federal repayment plans.

In addition to the Standard Repayment plan, there are the following plans:

•   One option is the Graduated Repayment Plan. Under this plan, loan payments are made over a 10-year period. But unlike the Standard Repayment plan, loan payments start at a lower amount and are gradually increased every two years.

•   Another option when it comes to federal repayment plans is the Extended Repayment Plan. The Extended Repayment Plan has a longer repayment term option — up to 25 years. Monthly payments under this plan can be either fixed or graduated amounts. The extended repayment term means that you may have lower monthly payments.

Be aware, however, that choosing a longer repayment period could cost you more over the life of the loan due to interest that accrues every month that the loan is still outstanding. Think carefully about what might best suit your needs so you can pay off your student loan debt comfortably.

There are also four income-driven plans that calculate monthly payments based on a percentage of the borrower’s discretionary income. The percentage will vary based on the specific income-driven repayment plan you are enrolled in, but can be between 5% and 20%. Depending on the plan, repayment is extended over 20 or 25 years.

The plans available are:

•   The new SAVE Plan (Saving on a Valuable Education; it goes into full effect on July 1, 2024), which replaces the REPAYE plan

•   The PAYE Plan (Pay as You Earn)

•   The ICR Plan (Income-contingent Repayment)

•   The IBR Plan (Income-based Repayment)

With federal loans, you can change your repayment plan at any time. If you are interested in switching the plan you are enrolled in to better manage your debt, the Federal Student Aid website offers a repayment
calculator that could help give you an idea of what your monthly payments may be like under each of the different payment plans.

This could help you make an informed decision about which plan may work best for your personal situation, based on what you qualify for. You could also use an online Student Loan Payoff Calculator to get an idea of when your loan payoff date may be based on your interest rate and monthly payments. Yes, crunching numbers can take a bit of time, but these tools can make it simple, show you your alternatives for managing your debt, and provide some much-needed peace of mind.

Deferment and Forbearance

If you’re really in dire straits and can’t afford to make your normal monthly payments on your student loans at all, you may be able to put your federal student loans into deferment or forbearance.

These programs offer options to temporarily reduce your monthly payment amount or pause your monthly payments entirely for a limited period of time. Not all borrowers are eligible for deferment or forbearance — in order to qualify you need to meet certain eligibility requirements.

A few points to note:

•   If you’re interested in deferring your federal student loans to help with student loan debt, you’ll want to contact your student loan servicer. Your student loan servicer may require you to fill out paperwork or talk to an advisor before approving a deferral or forbearance of your student loans.

•   Student loan servicers may offer assistance with student loan debt management at no cost. They also may be able to explain how student loan deferral or forbearance will work in your specific circumstances.

•   It is also important to know that during deferment, depending on the type of loan borrowed, the borrower may still be responsible for paying interest that accrues.

•   If a loan is in student loan forbearance, the borrower will be responsible for paying accrued interest.

While deferring your student loans can be helpful when you’re undergoing a brief period of economic hardship, it may not be as helpful when it comes to managing loans long-term, since interest may continue to accrue and neither option changes your loan repayment terms. Keep reading to learn more options beyond deferment and forbearance.

Forgiveness Programs

One source of federal student loan debt help are loan forgiveness programs. These programs essentially forgive a remaining portion of federal student loan debt after you meet certain requirements. That means you don’t have to pay it; you may also hear this referred to as loan cancellation or discharge.

Here are specifics about student loan forgiveness:

•   One of the most well-known loan forgiveness programs is the Public Service Loan Forgiveness program. This program offers federal student loan forgiveness for some people working full-time in qualifying public interest fields for 10 or more years.

Public Service Loan Forgiveness, also known as “PSLF,” offers federal student loan forgiveness for certain public servants (teachers, government workers, and some health professionals) and non-profit employees who qualify after 120 on-time qualifying payments.

Unfortunately, PSLF isn’t available to everyone. To qualify for Public Service Loan Forgiveness, you must work for a qualifying employer. Generally, government organizations and certain non-profits will be considered qualifying employers for the purpose of PSLF, but to be sure that your job counts for the PSLF program, you can submit a PSLF employment certification form to verify your employer’s eligibility for the program.

•   If you have a disability, you may qualify for student loan forgiveness.

•   If your school closed or misled you, your loan(s) may be discharged.

•   If you have declared bankruptcy, your debt may be canceled.

💡 Quick Tip: If you have student loans with variable rates, you may want to consider refinancing to secure a fixed rate in case rates rise. But if you’re willing to take a risk to potentially save on interest — and will be able to pay off your student loans quickly — you might consider a variable rate.

Options for Private Student Loan Borrowers

What you’ve just read covers how to get help with federal student loans. But what if you have private student loans? (Private loans are also an option for refinancing federal loans, but if you do so, be aware that you forfeit federal protections, such as forbearance, and if you refinance for an extended term, you may pay more in interest over the life of the loan.)

If your private student loans are proving challenging to pay, here are some ways you might move forward:

•   You could see whether refinancing your private loans with a different private loan can secure a more affordable payment.

•   See if your employer offers an assistance program. Some will match repayments of student loans up to a certain amount.

•   Retool your budget. The debt avalanche or debt snowball method might help you reframe your income and spending to help you get on top of your student loans.

•   Seek credit counseling. Learn more about that below.

Credit Counseling

If you are feeling overwhelmed or are in a quandary about how to proceed with your student loan debt, consulting with a nonprofit credit counselor could be a good idea. You can gain the expertise and insights of someone who specializes in this terrain and hear ideas for how you might handle the situation. One well-regarded example of such an agency is the National Foundation for Credit Counseling, or NFCC.

Here’s how credit counseling can help when you’re in this stressful situation:

•   A counselor can review your student loan debt and finances and develop a plan which you then manage on your own.

•   Another option may be to have the counselor join you on a phone call with the issuer of your student loans to discuss options.

Having a trusted professional in your corner can be a key source of support when you face challenges with your student loan debt.

Avoid Student Loan Scams

Here’s a sad fact: Yes, there are scammers out there, looking to take advantage of people who have student loan debt. They typically offer deals to help you get out of debt but wind up cheating you. Getting involved with these people can make a difficult situation even worse, so be cautious.

The two main kinds of scams to know about are as follows:

•   Student loan consolidation scams: In this ploy, a company promises to consolidate your federal loans. They charge you an upfront fee (never pay upfront fees, by the way) and then don’t do anything on your behalf. If you want to consolidate your federal student loans, you can do so for free at StudentLoans.gov.

•   Student loan debt relief scams: Companies that advertise or contact you, saying they can reduce or eliminate your debt, may be part of a scam. Above, you’ve read about the available options for managing your debt. There are no magic solutions to making the amount you owe vanish, so don’t be fooled by these promises.

How to spot these scams:

•   As noted, promises of making debt disappear to help with student loans are likely bogus.

•   Those that give you an urgent deadline to apply in order to eliminate debt are probably also fraudulent.

•   Requesting an upfront fee to apply for relief via the Department of Education is a signal that you are dealing with a scammer.

•   A company that says they are affiliated with the Department of Education but isn’t listed at StudentLoans.gov is one to avoid.

•   A business that says they need your FSA ID could well be a scammer.

Recommended: Student Loan Help Center

Student Loan Refinancing

As mentioned briefly above, another option for help with student loans may be refinancing them. For some borrowers, refinancing student loans could help lower monthly payments. However, if you refinance federal loans with private ones, keep in mind that you’ll forfeit federal protections and may, with an extended term, pay more interest over the life of the loan.

When you refinance your loans, a new private lender pays off your current federal and private student loans and offers you a new loan. The goal is to secure a better interest rate or better repayment terms, which can help you take control of your student loan debt. It’s one of several options you have available to get through what can be a challenging moment in your life.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

A college degree can be a major rite of passage and career stepping stone for millions of Americans. Putting one’s education to work can unlock professional rewards and a solid financial future.

However, there’s no denying that the cost of tuition can be daunting. The student loan debt balance has surged 66% over the past decade and, according to the Federal Reserve, currently totals more than $1.77 trillion (that’s trillion, not billion).

Having those payments unfurling before you can be stressful and frustrating, and the effects of student loan debt can be far-reaching. It can seem as if some of your personal, professional, and financial goals will have to wait until you can pay off what you owe. But there are ways to manage those loans and navigate this situation. After all, student debt is what you are going through, not who you are.

Here, you’ll learn more about student loan debt, how it can impact borrowers’ life decisions, and ways to minimize those effects and manage debt more effectively.

Student Loan Debt Statistics

To understand how impactful student loan debt can be, here’s some perspective. Consumer debt in the United States is measured by the Federal Reserve in five distinct categories — home, auto, credit card, student, and other debt.

Using the Federal Reserve Bank of New York data from 2023, here’s how household debt stacks up in the U.S.:

•   Mortgage debt (excluding HELOCs, or home equity lines of credit): $12.14 trillion

•   Student loan debt: $1.599 trillion

•   Auto loan debt: $1.595 trillion

•   Credit card debt: $1.079 trillion

Here’s how educational debt stacks up more specifically: In 2023, the average student loan borrower carried $37,338 in federal debt and $54,921 in private debt.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Impact of Student Loan Debt on Life Plans

Given the cost of student loan debt, some borrowers may delay big life decisions, such as buying a home or starting a family until they are further along in their loan repayment or have their debt totally paid off. Here are some specifics about the potential negative effects of student loan debt. Then, more happily, you’ll find tips on managing what you owe.

Homebuying

One landmark study in the Journal of Labor Economics found that a $1,000 increase in student loan debt lowered the rate of homeownership by approximately 1.8% for people in their mid-twenties who went to a public college for four years. This is equivalent to a delay of about four months in achieving homeownership per $1,000 in debt.

Indeed, as student debt has increased, homeownership among younger Americans has decreased. Experts, however, caution that this is a complex situation and not a matter of student debt meaning you can’t buy a house.

It’s true that student loans can raise a person’s debt-to-income ratio (DTI), a critical measure of creditworthiness. And it can slow an individual’s ability to save for a down payment.

That said, there are ways to get a mortgage with a student loan. By managing debt responsibly and building your credit score, you can achieve this goal. It’s also wise to look into the various mortgages available with as little as 3% down or even 0% for qualifying candidates.

Pursuing Graduate School

If you have undergraduate student loan debt, you may decide to delay or forgo enrolling in a graduate or professional degree program. Graduate school can often mean even more debt. According to the Education Data Initiative, the average graduate student loan debt is $76,620 among federal borrowers, with only 14.3% of that coming from the borrower’s undergraduate studies.

That said, an advanced degree can mean increased job opportunities. For example, the starting salary for those who majored in computer and information sciences of a recent graduating class was $86,964 with a bachelor’s degree and $105,894 with a master’s degree. And if you want to go to medical school, law school, or business school (which can lead to fulfilling and lucrative careers), you will need significant additional training. So it’s important to determine if taking out the debt is worthwhile vs. your anticipated earning potential.

Recommended: Average Cost of Medical School

Employment and Career Choices

What you’ve just read indicates some of the ways that student loan debt can impact your career plans. There are a couple of other ways that your loan balance might impact your career:

•   If you have significant debt and are faced with the choice between your dream job at a lower salary and a basic job at a higher pay grade, you might opt for the one that fattens your bank account even though it doesn’t thrill you.

•   Also, some companies (particularly those in the financial industry) may check your credit score as part of your job application. Student loans could build your score if you pay on time, and they could broaden your credit mix. But loans also create the opportunity to make a late payment or miss one entirely. Those are aspects of your payment history, the single largest contributor to your score. If you don’t stick to your schedule and pay what you owe every month, you could wind up with a lower score.

Recommended: Average Student Loan Debt by State

Marriage and Divorce

Student loans can also impact one’s personal relationships. According to a 2023 Student Loan Planner® survey, one in four borrowers said they delayed their marriage plans due to student debt. In addition, more than half of respondents (57%) said their student loans were a source of considerable stress in their marriage or relationship.

Marriage can impact your student loan payments, depending on the types of loans you have and the repayment plan you are on. If you are on an income-based repayment plan, your monthly bill might change based on how much you and your spouse earn and how you file your taxes.

Marriages and money can create complex situations that are hard to fully decode. When looking at the impact of student loan debt on divorce, it can be tricky to unravel the interplay of factors. One survey conducted a few years ago found that 13% of respondents attribute student loan debt as a cause of their divorce. Yet some couples with student loan debt were more likely to delay divorce due to their student loans and how it might impact their ability to repay their debt. So in matters of the heart and the wallet, there isn’t a clear consensus.

Recommended: How Marriage Can Affect Your Student Loan Payments

Starting a Family

According to the USDA and other government statistics, it can cost more than $330,000 to raise a child to age 18. That’s no small amount, and it’s a daunting figure for many. Those carrying a hefty amount of student debt may delay parenthood as they pay off their loans.

One landmark New York Times survey in 2018 found that among people who didn’t plan to have children at all, 13% said it was as a result of student debt. In a more recent study of those with high student debt, 35% said they were waiting to have kids due to the impact of their loans on their finances. Still others may respond to this scenario by adopting strategies to pay off student loans faster.

Saving for Retirement

One of the negative effects of debt on young adults is that their retirement savings can be impacted. A recent study conducted by Fidelity found that 84% of borrowers felt that their loans impacted their ability to save for their retirement.

A study from a few years ago bore this out: Research by the Center for Retirement Research at Boston College found that Millennials who had never borrowed student loans saved twice as much for retirement by age 30 as college graduates who have student debt.

Here’s another bit of intel that supports the fact that student debt can make it harder to save for your future. Fidelity also found that the percentage of student loan borrowers who put at least 5% of their salary into their retirement plan rose from 63% to 72% during the Covid-19 loan payment pause.

Delaying retirement savings can mean playing catch up in your later years. Typically, the earlier you start saving for retirement, the more time your money will have to benefit from compound interest.

It can seem overwhelming to start saving for retirement while you’re still paying off student loan debt, but doing both at the same time can help you meet your financial goals in the future.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

How to Manage Your Student Loans

As you’ve just read, student loans can impact many areas of your life. But you are not alone in this situation, and your loans will not be with you forever. Focus on smart solutions to help you manage your debt repayment. Consider the following strategies.

Keep Paying

Even when money is tight, it’s wise to pay on time, as much as possible. Timely payments are the single biggest contributing factor to your credit score, an important financial metric. So do your best to keep current on those monthly installments.

Make a Budget

It’s hard to effectively manage your student debt and your finances in general if you don’t know how much money you have coming in and going out. If you don’t yet have a budget or yours isn’t working well for you, commit to reviewing different budgeting methods and finding one that works.

This process of tracking your money and possibly trimming your spending could reveal ways to free up more funds to pay off your debt.

Repayment Plans

There are federal student loan repayment plans that base your monthly payment on your income or ones that give you a fixed monthly payment. Those that are based on your income may help you lower your monthly payment.

It can be worthwhile to consider your options. For fixed payments, you may have a choice between standard, graduated, and extended plans. If you focus on income-driven repayment (IDR) plans, you will likely review the SAVE Plan (which replaces REPAYE), PAYE, IBR (income-based repayment), and ICR (income-contingent repayment) plans. With IDR plans, once you satisfy a certain number of months of qualifying payments, you can be eligible for forgiveness on the remaining balance of your loan(s).

Deferment and Forbearance

If you are finding it challenging to pay your federal student loans, you may be able to take advantage of deferment or forbearance, which are both ways of pausing or lowering your payments for a specific period of time. Perhaps you haven’t yet found a job after graduation or have another situation that is impacting your ability to pay; these programs can help qualifying borrowers out.

The main difference between is that during deferment, borrowers are not required to pay the interest that accrues if they have a qualifying loan. With forbearance, however, borrowers are always responsible for paying the interest that accrues, no matter what kind of federal loans they have.

Forgiveness

Here’s another path to lessening the impact of student loans on your life: forgiveness, which means you may not have to pay back some or all of your federal student loans. For these programs, there are a variety of qualifying factors, such as whether you’re a teacher, government employee, or worker at a nonprofit. Other factors could be that you have a disability, your school closed, or you declared bankruptcy, among others. It’s worthwhile to research your eligibility because the upside could be significant.

Recommended: A Look at the Public Service Loan Forgiveness Program

Refinancing

Another possible way to reduce the impact of student debt on your life is student loan refinancing.

When you refinance your loans you take out a new loan with a private lender. Depending on your credit history and financial profile, you can qualify for a lower interest rate, which could substantially lower the amount of money you pay in interest over the life of the loan (depending on the term you select, of course). Two important notes about this:

•   When you refinance federal loans with a private loan, you forfeit federal protections and benefits (such as the forbearance and forgiveness options mentioned above).

•   If you refinance for an extended term, even though your monthly payment may be lower, you may pay more in interest over the life of the loan.

To see how refinancing could help you manage your student loans, take a look at an online student loan refinance calculator.

The Takeaway

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

If you’re wondering how your student loan balance compares, here are the facts: The average student debt among borrowers ranges from more than $30,000 to over $50,000, depending on the kind of loans you have. Those are significant numbers, no doubt. If you are feeling the weight of your debt, you are not alone. There are currently about 45 million borrowers whose loans totaled a whopping $1.77 trillion at last count.

When you have student loans, it can be natural to think about how it compares to, say, your cousin’s, your BFF’s or your coworkers’ debt. Especially when you are feeling stressed about making your payments and paying off what you owe. “Is everyone in the same boat?” you may ask yourself.

Knowledge is power, so read on to learn more about how student loans shape up for other Americans, as well as options for managing your debt. You’ll get through this!

What Is the Average Student Loan Balance?

There are different ways to look at the data on average student loan balances. Here, using intel from the Education Data Initiative, you’ll find some important statistics so you can see how your student loan balance may compare to others.

•   The average federal loan debt is $37,338 per borrower.

•   The average private loan debt is $54,921 per borrower.

•   The average student borrows more than $30,000 towards their bachelor’s degree.

•   92% of borrowers with student loan debt have federal loans.

•   The average graduate student loan debt is $76,620 among federal borrowers.

•   For those with master’s degrees, the average debt is $83,651; among those with PhDs, the figure is $125,276.

•   As for Parent PLUS loans, the average amount of debt is $29,528, according to the most recent years studied.

Are you curious about how debt aligns with age? Here are additional figures to know.

•   Those borrowers age 30 have the highest average outstanding student loan debt, totaling $42,822 per person.

•   34% of those ages 18 to 29 have student loan debt.

•   Borrowers under age 40 account for 55% of all student loan debt.

•   Borrowers ages 40 to 49 owe 22% of America’s student loan debt balance.

Wondering how gender plays into student loan debt? Approximately 66% of debt belongs to women. The rest is borrowed by men. The data does not yet reflect nonbinary borrowers but will likely do so in the future.

If you are wondering how race correlates to student loan debt, these figures will shed some light on that angle:

•   Black college graduates owe on average $25,000 more in student debt than White graduates.

•   When checked four years after graduation, Black borrowers had student loan balances 188% higher than those of White borrowers.

•   Asian college graduates are the fastest to repay their debt.

•   Asian borrowers are also the most likely to earn a salary that exceeds their student loan balance.

Here’s a look at how student loan debt adds up by geographic location:

•   Borrowers in Washington, DC, have the top spot in terms of their average federal student loan balance at $54,945.

•   Borrowers in North Dakota have the lowest average federal student loan debt at $28,604. North Dakotans who take out these loans also have the distinction of living in the only state where borrowers have an average balance under $30,000.

•   The state with the highest percentage of borrowers with student loan debt is Washington, DC (not exactly a state, but still) at 17.2%. Hawaii earns the honor of state with the lowest figure. Only 8.4% of residents have student loan debt.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Other Student Loan Statistics

As you read these figures, you probably recognize that many other people are dealing with student debt, and considerable amounts of it in many cases. While you are thinking about how your student debt compares to others’, take a look at a few other interesting statistics:

•   The average student borrower takes 20 years to pay off their loan debt.

•   Some professional graduates can take more than 45 years to pay off all of their student debts.

•   At any moment, an average of 7% of student loans are in default. That’s about 4 million loans going into default per year.

•   In 2023, the amount of student debt that was forgiven was less than 1% of the total student loan debt balance.
Only 18.4% of eligible student loan borrowers apply for forgiveness.

Here’s something else to consider. If you’re getting ready to pay back what you owe or are already making your payments, you likely know how much you originally borrowed. But how can you tell what you owe with accumulated interest added on? Keep reading to learn more.

How to Check Your Student Loan Balance

Student loans come in two broad types, federal and private. Federal loans are either subsidized or unsubsidized. If it’s the former, then the government has been paying your interest while you’ve been in school. You only become responsible for interest when you’re no longer in college (and after your six-month grace period).

With unsubsidized loans, the interest will accumulate on the amount you borrowed while you’re still in school. You’re responsible for paying that interest from the moment your unsubsidized loan is disbursed.

Federal Student Loans

To find out what you owe in federal loans, you can check your federal student loan balance at StudentAid.gov. It will also show you how much of your loan balance is subsidized versus unsubsidized, along with other types of useful information.

You’ll need to create an account (if you haven’t yet done so) and use your FSA ID to log in and get the information you need.

Private Student Loans

For private student loans, you’ll need to contact the lender that gave you the funds to find out how much you owe. If you borrowed from more than one private lender, you’ll need to contact each one individually.

While federal loans typically come with a six-month grace period, check with each private lender, if applicable, to see if you have a similar grace period with them.

How to Manage Student Loan Debt

Once you know your total balance, then it’s time to figure out some strategic ways to pay back the balance. You want to still be able to enjoy postgrad life while eliminating those student loans.

Federal Repayment Programs

The federal government offers forgiveness programs, and, if relevant to your situation, you may get a portion of your remaining debt forgiven — meaning, you wouldn’t have to pay it back. It’s important to check to see which federal programs currently exist and see if you may qualify.

Some options to consider:

•   While the Standard Repayment Plan is the typical default repayment plan offered by the federal government, there are different federal student loan repayment options available that can have longer terms — but you have to request one. If you choose an option with a longer term, this will likely lower your monthly payment, but increase the amount of interest you’ll pay over the life of your loan. You might look into the Graduated and Extended Repayment Plans offered for federal loans.

•   A federal Direct Consolidation Loan can allow you to combine federal loans into one payment to lower the monthly amount due, simplify your personal finance management, and/or access federal forgiveness programs. (Note: This is not refinancing with a private lender; that will be covered in a minute.)

•   There are also income-driven repayment plans for federal student loan balances where payments are capped, based on your income. There are likely qualifying factors you’ll need to know about. If you consistently make payments for a specified number of years, depending upon your modified agreement, any remaining balance could be forgiven. (One potential downside is that loan amounts forgiven under this program can be taxed as income by your state.).

The income-driven plans you may qualify for are:

◦   The SAVE Plan (this replaces the REPAYE plans and comes fully available on July 1, 2024)

◦   The PAYE Plan

◦   The Income-contingent Repayment Plan, or ICR

◦   The Income-based Repayment Plan, or IBR a minute.)

◦   You might also look into the Public Service Loan Forgiveness (PSLF) Program where people who work in public service occupations may qualify for 100% forgiveness after making 120 on-time, qualifying payments.

Among the qualifying requirements, you would need to be employed full-time at an eligible governmental agency (federal, state or local) or at another designated organization, such as a 501(c)(3) nonprofit (not religious).

💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Options for Private Student Loan Borrowers

If you have borrowed private student loans, sorry: None of the above options are available, nor can you refinance a private student loan with a federal one. But don’t feel discouraged, there are still repayment options.

•   You can see what offers you qualify for from other lenders. Depending on such factors as your credit score and loan term, you might be able to get a deal you prefer with a different lender. In other words, you are refinancing private loans with another private loan. (Just keep in mind that when you refinance a loan for an extended term, you typically pay more interest over the life of the loan.)

•   You might check with your employer and see if they offer any student loan repayment assistance. Some employers (though far from the majority) offer this as a benefit.

•   If you are truly struggling to make your loan payments, you might talk to your lender about what flexibility there may be in terms of your loan’s interest rate and/or repayment term. Meeting with a nonprofit credit counselor who is knowledgeable about student loans can be another helpful step.

Student Loan Refinancing

You’ve just read about private student loans and possibilities for refinancing them. Earlier in this article, you also learned about federal Direct Consolidation student loans. There’s one other option that you may want to consider as you manage your student loans and work to pay them off: refinancing federal student loans with private loans.

In this case, your federal loans are paid off with funds from a new loan secured from a private lender, which hopefully offers a more manageable monthly payment.

Two important points:

•   When you refinance a federal student loan with a private one, you forfeit federal benefits and protections, such as forbearance and forgiveness.

•   If you refinance for an extended term, it could mean that you pay more interest over the life of the loan, though your monthly payments may be more manageable for your budget.

If you’re considering this path, it can be wise to spend a bit of time with an online student loan refinance calculator to see how different options might play out. That can help you get on the best path to being debt-free based on your own particular circumstances.

The Takeaway

Student loans are a fact of life for more than 45 million Americans, and repaying them can be a challenge. As you look at your debt and repayment plan, it can be helpful to see how you compare to others who are also carrying this kind of loan. Average balances are currently in the range of $35,000 to $55,000 per borrower (or higher), so you may find that your situation is similar to many of your peers’.

However, just because student debt is common doesn’t mean it’s easy to pay back. So consider your repayment alternatives carefully and find the right fit for your needs. While it takes focus and patience, you can find a path to be done with your student debt.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Paying off your mortgage ahead of time might sound like an incredibly savvy thing to do — and in some cases, it is. But it’s not the right money move for everyone. And paying off a mortgage in just five years? It’s an aggressive strategy that may or may not be the smartest choice.

Benefits and Risks of Paying Off a Mortgage Early

Achieving homeownership is, well, an achievement. And since you’re here reading an article about paying a mortgage off early, you’re clearly an overachiever.

Paying off any kind of debt early usually seems advisable. But for most of us, our home is the single largest purchase we’ll ever make — and paying off a six-figure loan in only a few years could wreak havoc on the rest of your finances.

In addition, some mortgages come with a prepayment penalty, which means you could be on the line for additional fees that might eclipse whatever you’d stand to save in interest payments over time. (Mortgages tend to have lower interest rates than many other common types of debt anyway.)

That said, if you have the cash, paying off your home early can lead to substantial savings, not to mention helping you build home equity as quickly as possible.

Let’s take a closer look at the risks and benefits of paying off a mortgage early.

Benefits of Paying Off a Mortgage Early

The main benefit of paying off a mortgage early is getting out of debt. Even minimal interest is an expense it can be nice to avoid.

Additionally, paying off your home early means you’ll have 100% equity in your home, meaning you own its whole value, which can be a major boon to your net worth.


💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

Risks of Paying Off a Mortgage Early

Paying off a mortgage early may come with risks, and not just prepayment penalties (which we’ll touch on again in a moment). In many instances, it can be a plain old bad financial move.

Depending on what your cash flow situation looks like, and what the interest rate on your mortgage is, you might stand to out-earn early payoff savings if you funnel the extra cash to your investment or retirement accounts instead. (You can use this mortgage calculator to see how much interest you stand to pay over the lifetime of your home loan — and then compare that to how much you might earn if you invested that money instead.)

Additionally, if you have other forms of high-interest debt, like revolving credit card balances, it’s almost always a better idea to focus your financial efforts on those pay-down projects instead.

“No matter what method works best for you, it’s important to cut spending as much as you can while you’re tackling your debts,” said Kendall Meade, a Certified Financial Planner at SoFi.

And if you have historically taken the home mortgage interest deduction on your taxes, it’s also worth talking with your tax advisor about what impact paying off your mortgage early will have on your deductions. (For 2023, the standard deduction is $27,700 for married couples filing jointly and $13,850 for single people and married people filing separately. For 2024, the standard deduction for married couples filing jointly rises to $29,200. For single taxpayers and married people filing separately, the standard deduction rises to $14,600.)

To recap:

Watching Out for Prepayment Fees

One of the biggest risks of paying off a mortgage before its full term is up is the potential to run into prepayment penalties. Some mortgage lenders charge large fees to make up for the interest they’ll be missing out on.

Fortunately, avoiding prepayment penalties on home loans written after 2014 is easier: Legislation was passed to restrict lenders’ ability to charge those fees. But if your mortgage was written in 2013 or earlier — and even if not — it’s a good idea to read the fine print before you hit “submit” on your lump-sum payment, and ideally before you accept the contract at all.

Steps to Paying Off a Mortgage Early

You’ve assessed the risks and benefits and decided that paying off the mortgage early is the right move for you. Nice!

Now let’s take a look at how to get it done.

Pregame: Considering Repayment Goals When House Shopping

This option won’t work if you’ve already found and moved into a home, but if you’re still in the home-shopping portion of the journey, looking at inexpensive homes can be a great first step toward paying off your mortgage fast.

After all, if the home has a lower price tag, it’ll be easier to reach that goal in a shorter amount of time. Ideally, you want its value to appreciate, so you’ll still want to shop around before just choosing the lowest-priced house on the block.

Maybe you signed your home contract years ago and are just now considering getting serious about early mortgage repayment. Take heart! There are some easy steps to follow to make your mortgage disappear in five years or so.

1. Setting a Target Date

The first step: figuring out exactly when you want the mortgage paid off. Choosing your target date will make it easier to figure out how much additional money you need to send to your lender each month.

Five years is a pretty tight timeline for this kind of debt repayment process, but it could be doable depending on your earnings and commitment.

2. Making a Higher Down Payment

The higher your down payment, the less loan balance you’ll have to pay down, so if you can manage it, offer as much as you can right at the start. There are many assistance programs for down payments that might boost your offer and put you on track for paying down your mortgage early.

Also, realize that first-time homebuyers — who can be anyone who has not owned a principal residence in the past three years, and some others — often have access to down payment assistance.

3. Choosing a Shorter Home Loan Term

Obviously, if you want to pay your mortgage off in a shorter amount of time, you can consider choosing a shorter home loan term; most conventional mortgages are paid off over 30 years, though it’s possible to find loans with 15- or even 10-year terms.

However, your interest rate might be higher on those loans in order to make the deal worthwhile to the lender, so for many borrowers, choosing a longer home loan term and making aggressive additional payments is a better option.

4. Making Larger or More Frequent Payments

One of the most achievable ways for most borrowers to pay off a home loan early is to pay more than the monthly minimum, either by adding extra toward the principal in the monthly payment or by paying more than once per month.

Unless you’re due for a six-figure windfall, chipping away at the debt this way might be the smartest option. But how does one come up with the additional money to funnel toward that goal?

5. Spending Less on Other Things

As with most debt repayment strategies, chances are you’ll need to find other ways to cut back on spending in order to set aside more money to put toward the mortgage. This could be as small as ditching the daily latte or as serious as choosing to give up a car.

6. Increasing Income

Another option, if there’s just nothing left to cut? Finding ways to increase your income, perhaps by starting a side hustle or asking for that long-overdue raise.


💡 Quick Tip: A Home Equity Line of Credit (HELOC) brokered by SoFi lets you access up to $500,000 of your home’s equity (up to 90%) to pay for, well, just about anything. It could be a smart way to consolidate debts or find the funds for a big home project.

How Much House Can You Afford Quiz

The Takeaway

Pay off a mortgage in five years? While paying off your home loan early could help you save money on interest, sometimes the money is better spent on other financial goals and projects. So it pays to take a close look at the numbers, just as you did when you got your mortgage in the first place.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

Photo credit: iStock/fizkes

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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When you close on a home, one of the most important documents you’ll review and sign is your mortgage note. It’s an agreement between you and the lender that outlines the terms and conditions of the mortgage. The document tells you how much and when to pay, and spells out the consequences if you don’t.

What Is a Mortgage Note?

A mortgage note, often referred to as a promissory note, is what you sign when you agree to take on the responsibility of a mortgage. The note outlines:

•   Your interest rate

•   The amount you owe

•   When the payments are due

•   The amount of time it will take to repay the loan

•   How to remit payment

•   Consequences for missed payments

It’s one of the key documents you’ll sign at closing.

Promissory notes also may be used in owner-financed home sales. The buyer and seller sign the document, which contains the loan terms. When a borrower pays the seller directly, the promissory note gives the lender the ability to enforce their rights through a mortgage lien, foreclosure, or eviction.


💡 Quick Tip: SoFi’s Lock and Look ⁺ feature allows you to lock in a low mortgage financing rate for 90 days while you search for the perfect place to call home.

What Is Included in a Mortgage Note?

The mortgage note outlines the conditions and responsibilities of the buyer. You’ll see sections like these in a mortgage note:

•   Borrower’s promise to pay. This section includes the total amount of money you’re borrowing and the name of the lender to whom you will remit payment.

•   Interest. The interest rate charged on the unpaid principal is listed here.

•   Payments. Borrowers agree to pay a monthly amount before or on a specific date. The place where borrowers can remit payment is also listed.

•   Borrower’s right to prepay. This section specifies a borrower’s ability to pay toward the mortgage principal without penalty. (Some lenders charge a fee if you pay off some or all of the principal early. Make sure you understand whether you have the right to prepay without a penalty before you get to the closing table.)

•   Loan charges. All charges by the lender must be legal. Any amounts over the legal limit will be refunded to the buyer or applied to the principal.

•   Borrower’s failure to pay as required. Default is clearly defined for the buyer, as are late charges and what happens in the event of default.

•   Giving of notices. Borrower and lender will have the details of how to contact each other for legal purposes.

•   Obligations of persons under this note. All people listed on the mortgage note are equally responsible for repayment of the loan.

•   Uniform secured note. Buyers are advised that a security instrument is signed in addition to the note that protects the note holder from potential losses by giving them the ability to foreclose in case of default.

How Does a Mortgage Note Work?

A mortgage or promissory note is drawn up by the lender when preparing your mortgage for closing during the underwriting process. This document is what makes the terms and conditions of the mortgage legally binding.

Borrowers will see the mortgage note at closing, though the terms and conditions will be outlined in a closing disclosure provided at least three business days before the closing date. The closing disclosure document can be compared with the loan estimate that was provided at the beginning of the mortgage application process. (This help center for mortgages is useful if you want to understand the entire mortgage process.)

A mortgage note is accompanied by another document, called the mortgage, security instrument, or deed of trust. It restates the terms of the mortgage note and outlines the rights and responsibilities you have as a borrower. As a security instrument, the document specifically gives the lender the right to foreclose on your property if you fail to make payments. Having this right reduces the risk to the lender, which can offer more competitive terms to the borrower in return.

Who Holds the Mortgage Note?

A mortgage note isn’t usually held by the lending institution that originated your loan. Mortgage notes are often sold, and it’s not easy to tell who holds your mortgage note. This is because the loan servicer (the company that sends your mortgage statements and handles day-to-day management of the loan) is usually different from the note holder.

Selling a Mortgage Note

You’ll see in your closing documents a provision that allows the lender to sell the mortgage note. This is common and legal in home contracts and typically occurs soon after the property closes. Lenders sell mortgages on the secondary mortgage market, usually to one of the large federally backed mortgage companies, Fannie Mae or Freddie Mac. When the mortgages are sold, the lender doesn’t have to keep the mortgage on their balance sheet, which, in turn, allows them to originate more mortgages for other borrowers.

Fannie Mae and Freddie Mac then bundle mortgages into what is called a mortgage-backed security. Investors around the world (think pension funds, mutual funds, insurance companies, and banks) can buy shares of mortgage-backed securities. The investors will receive steady returns as the mortgages are repaid by individual borrowers.

The loan servicer (which may be your original lender or a separate company) typically continues to service your loan, meaning you’ll send your payment to them. They’ll keep a small portion of your mortgage to cover their costs for servicing your loan while sending the rest to the buyer of your note.

When your mortgage note is sold, the terms of your mortgage won’t change. Your payment, interest rate, and due date will remain the same. If your servicer changes for any reason, you’ll be notified of the new servicer and the new way to remit your mortgage payment.

Different Kinds of Mortgage Notes

There are different types of mortgage loans and different kinds of mortgage notes to accompany them.

Secured Loans

With a secured mortgage note, the mortgage uses collateral to secure the property. The collateral is usually the property itself. A secured loan is usually accompanied by better terms, such as a lower interest rate and a longer repayment period.

Private Loans

Private mortgage notes are secured by private lenders. A seller may own the property outright and act as a private lender, setting their own terms for mortgage loans.

Institutional Loans

Institutional notes are mortgage notes issued by traditional lenders, such as financial institutions or banks. They’re highly regulated. Buyers must meet specific criteria, and the loans must have standard interest rates and repayment terms.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

The Takeaway

Understanding your mortgage note and how it works is a critical step in buying and financing a home. You should review the terms of your mortgage well before you arrive at the closing, and it may be helpful to review the details of the mortgage note with a professional, as the note can protect the buyer just as much as the seller.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

Photo credit: iStock/Chinnapong

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

⁺Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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