Page Content Credit Reports & Credit Scores Your Credit Report Your Credit Score How to Order a Free Credit Report Credit Report Errors Show/Hide Text Alternative UNDERSTANDING STUDENT LOANS IN REAL TERMS We have all heard the statistics: Tuition keeps rising, while student debt continues to increase. In fact, the United States now has more total student loan debt than credit card debt. The good news? Borrowers are eager to provide students with loans to make their college aspirations a reality. The bad news? Those same students will graduate with thousands in loan payments. Unfortunately, students often do not recognize the full impact of taking on additional debt. Let’s get nerdy and put an average debt load in terms anyone can understand. Copyright NerdwalletAll Rights Reserved 2012 Let’s start with some background on student debt: Average Student Debt The Average Credit Card Debt In The US Is: $15,956 Average in 2010: $25,250Public Schools: $22,420Private Non-Profit: $30,690 Students Accumulating Debt 2/3 of all students graduate with student loan debt Public Schools: 62%Private Non-Profit: 72% Interest Rates Federal Loans: 3.4% Stafford Subsidized, 5% Perkins, 6.8% Stafford UnsubsidizedPrivate Loans: 3.4%, 9.5% Average, 13.5% Note: Variable Interest Rate Private Loans Can Vary From 3 – 17% Repayment Costs So how much will your payment be? $19,695 Private Loans$25,250 (in 2010) Mix of Federal/Private Loans Above With Conservative 5.1% Effective Interest Rate$5,555 Federal Loans 10 Years at 5.1% Interest Rate $282 Monthly $8,559 Total Interest Paid VS 20 Years at 5.1% Interest Rate $183 Monthly $18,634 How much is $183/month, really? Lease A Brand New Car Every Three Years 2012201520182021 Buy A New iPod Every Month For 20 Years That’s A Total Of 240 iPods Buy One iPod And 38K Songs That’s Roughly 152,640 Minutes 106 Days Of Music. That’s Right. Non-Stop. Be Invested In A 401K And Worth $100,000 After 20 Years Buy A Tropical Island Yes, Really. $30,000 will get you a nice spread even Robinson Crusoe would admire. Skydive Twice A Week For 20 Years That’s Over 2,000 Jumps But don’t avoid college just because of debt. The average college graduate with a bachelor’s degree is expected to earn $1.2 million more over the course of their lifetime than those with just a high school diploma. $1,200,000+ Average Salary $33,000 Take Home Pay (Approx.)$51,171 Average Bachelor’s Degree Salary8.8% Student Loan Payment30% Taxes (Approx.) $3,100 of your gross annual salary will be needed to cover $2,200 in loan payments (after taxes) Student Debt is not all bad, but it’s important to be aware of your future obligations and understand that responsible planning now can save you a lot of money later.