According to an Education Data report, the average student loan debt is around $39,351 per borrower. As a result, it can be hard to make the average student loan monthly payment. If you’re currently experiencing this and are trying to figure out how you can cut costs, you’re in the right place.
Lucky for you, you can lower your monthly payments. How? Here is everything you need to know about monthly payments and how to lower them.
What is the Average Student Loan Monthly Payment?
According to the above report, the overall average student loan monthly payment is $460. This can change, however, depending on a variety of factors, such as degree type. Typically, the higher the degree, the more money you’ll owe. Yet, even within a degree, the average monthly payment can vary. Take a look at the table below to better understand
Low Payment
Average Payment
High Payment
Associate’s Degree
$281
$333
$384
Bachelor’s Degree
$354
$448
$541
Master’s Degree
$350
$695
$1,039
Graduate Degree
$575
$1,210
$1,844
Professional Degree
$521
$1,537
$2,553
The reason these numbers vary is due to additional factors like salary and debt owed. Typically, people with larger salaries can afford to pay more. Similarly, the more debt you owe, the higher your repayment cost will be.
That’s why it’s important to understand these numbers. You can better understand how your financial situation influences your monthly payments. However, these factors (such as your degree type, salary, and debt owed) aren’t the only things impacting your payments.
The latest rates from Sparrow’s partners
If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking Apply below.
How Your Interest Rate Impacts Your Monthly Payments
Interest rates determine the overall cost of borrowing a loan. They’re usually described as a percentage of the loan principal.
Interest rates can be pretty impactful. Education Data reports that about 67% of borrowers’ total cost of repayment is interest. It’s important, then, to get as low an interest rate as you can to keep those costs down.
For example, let’s say you took out a $30,000 loan with a 5% interest rate. You’re on a payment plan with a repayment period of 20 years. If you make only minimum monthly payments for the entire life of the loan, you’ll pay $47,517 with monthly payments of $198. But, look at what happens if we lower that interest rate to 4% and keep all other factors the same. Now, you’d pay $43,631 with a monthly payment of $182.
Loan 1
Loan 2
Balance
$30,000
$30,000
Interest Rate
5%
4%
Repayment Period
20 years
20 years
Monthly Payment
$198
$182
Total Cost
$45,517
$43,631
Notice how much money the lower interest rate saves you despite having the same repayment period and payment plan. Just that one percent decrease would save you $16/month, $192/ year, and around $2,000 over the course of the loan. As you can see, understanding your interest rate is extremely important. Especially on larger loan balances, or with higher interest rates, it can be the key to lowering your monthly payment significantly.
How to Lower Your Monthly Payment
Now that we better understand your monthly payments, let’s get into how you can lower them.
Refinance
By refinancing your student loan, you’re letting a private lender pay off your current loans. They’ll then give you a new private loan to cover what you owe them. You can get better terms on this new loan such as a lower interest rate. Thus, securing these new terms can lower your monthly payment and help you save money.
You can refinance both federal and private student loans. However, consider the pros and cons of refinancing federal student loans before doing so.
To qualify for refinancing, you’ll need to have a good credit score and steady income. Individual lenders may also have additional requirements you need to meet. Be sure to ask them about those before applying.
Rather than searching for refinance lenders one-by-one, we recommend starting the process with an automated student loan refinance search tool. With the free Sparrow form, you can see the rates and terms you’d pre-qualify for with 17+ premier lenders.
Here is a list of the top refinance rates:
Student loan rates from our partners
Ascent
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 7/8/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 7/8/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.
LendKey
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
1 – Terms and Conditions Apply
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
2 – Cosigner Release
Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.
3 – Autopay Rate Reduction
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.
4 – AutoPay Discount & Lowest Interest Rate
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.
Earnest
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
Student Loan Origination (Private Student Loan) Interest Rate Disclosure:
College Ave
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 08/25/2022. Variable interest rates may increase after consummation.
This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 7/10/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
*The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 08/25/2022. Variable interest rates may increase after consummation.
This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 7/10/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
Consolidate Your Federal Student Loans
If you have multiple federal student loans, consolidating them can be a good idea. You’ll do this through a Direct Consolidation Loan. When you get a Direct Consolidation Loan, you’re combining all your federal loans into one. You’ll then only have one monthly payment to make as opposed to a few payments a month. Additionally, consolidating certain loans, like the Perkins Loan, makes them eligible for loan forgiveness.
It’s important to note that consolidating may not get you better terms like a lower interest rate. Still, it can simplify your monthly payments which, in turn, lowers how much you’ll pay per month.
To qualify, you must have loans in repayment or the 6-month grace period. If you’re currently still attending college, you cannot consolidate your loans yet.
Switch Repayment Plans
A more budget-friendly plan can lower your monthly payments. Federal borrowers, for example, have access to income-driven repayment (IDR) plans. These plans base your payments on your discretionary income. The idea is that by basing the payments on your annual income, it’ll help keep them more affordable for you.
Meanwhile, private loan borrowers can talk to their lenders to see if they offer similar plans. While these plans may not have as many benefits as an IDR plan, they can still save you money each month. Reach out to your lender if you have questions.
Pursue a Job with Debt Payoff Benefits
Imagine working for a company that offers to pay you extra money to put toward your student loans. It sounds like a dream, but it isn’t. Companies are already starting to offer debt payoff benefits, and many more are planning to add them in the future. That extra money they pay you means less money that you’ll have to pay for your monthly payments out of pocket.
Final Thoughts from the Nest
Your monthly student loan payment might be one of your biggest expenses. So, it’s worth knowing this information to help you better understand it and, hopefully, lower it. If you decide to lower your payment through refinancing, look no further than Sparrow.
Sparrow offers a form that will match you to what you best qualify for from our 15+ partnering lenders, many of which provide competitive refinancing offers. From there, you can compare the different lenders you’re interested in before making a final decision. Fill out the Sparrow form today to get one step closer to lowering your monthly payments.