How Much Student Loan Debt Is Too Much?

Q: Can you lower your student loan monthly payments?

Yes, you may have several options to lower your student loan monthly payments. If you’re a federal student loan borrower, you may lower your monthly payments by consolidating your loans into a single federal loan with a longer repayment period up to 30 years. Refinancing your student loans into a longer and private repayment plan can also reduce your monthly payment. Borrowers facing economic hardship may also qualify for a forbearance that can temporarily suspend or reduce the borrower’s monthly payment obligations.

Q: How do you know when you have too much student loan debt?

You may have too much student loan debt if you find yourself in economic hardship and unable to make monthly payments. Entering delinquency, going into default, or relying on deferments is probably a sign that you are burdened with too much student loan debt. You may have too much student loan debt if your gross monthly income is insufficient for covering your debt obligations.

Sulaiman Abdur-RahmanUpdated June 15, 2022

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Editor’s Note: Since the writing of this article, the Biden administration has extended the pause on federal student loan repayment through mid 2023. Borrowers who cannot afford their student loan payment obligations may be carrying too much student debt. The average federal student loan borrower owes about $37,000 in education loan liabilities as of the first quarter of 2022.Student loan debt across the United States stood at nearly $1.75 trillion as of Q1 2022. The vast majority of this debt — about $1.6 trillion — consisted of federal student loan obligations held by 43.4 million borrowers.The federal government in March 2020 suspended student loan payments in response to the COVID-19 pandemic. Some elected officials have called for broad student loan forgiveness as a possible solution for reducing America’s overall student loan debt burden.

Student Loan Debt in the United States in 2022

The average student loan debt across the United States is tens of thousands of dollars per borrower. As mentioned earlier, the average borrower holds about $37,000 in federal student loan obligations as of the first quarter of 2022.Consider the following data:

Student loan debt across the United States stood at nearly $1.75 trillion as of Q1 2022, according to Federal Reserve data
Federal student loan debt is about $1.6 trillion as of Q1 2022, federal data show
More than $140 billion in student loan debt consists of private student loan obligations as of 2022, according to the Education Data Initiative
Some 43.4 million borrowers carry federal student loan debt as of Q1 2022, data show

Some may ask, how long does it take to pay off student loans? It can take borrowers between 10 to 30 years to pay off federal student loans and five to 25 years to pay off private student loans.Some borrowers may never finish repaying a student loan during their lifetime. What happens to student loans when you die is the debt might be discharged, although some private lenders may demand repayment from your estate.As mentioned earlier, the federal government in March 2020 suspended student loan payments in response to the COVID-19 pandemic. After a number of extensions, the moratorium on student loan payments is scheduled to be lifted on August 31, 2022. Borrowers can make more than the minimum payment when paying off student loans.

How Much Is Too Much Student Debt?

Borrowers who can’t afford their student loan payments may be carrying too much student debt. A student loan deferment allows borrowers to temporarily stop making payments on their student loan debt obligations.Federal student loan borrowers can request a deferment for various reasons, including economic hardship or unemployment. Some private lenders may also offer temporary deferment relief to qualifying borrowers.Borrowing money to attend college can help you achieve your goals, but getting overwhelmed with student loan debt may trigger financial stress and anxiety.

Calculating Your Student Loan Payments

Borrowing money to help pay for tuition and other college expenses puts you in debt and makes you legally responsible for repaying your student loans. The federal government has a loan simulator that can help you calculate your federal student loan payments. The U.S. Department of Education offers several repayment plans for federal student loan borrowers. An income-contingent repayment plan, for example, in some cases can reduce a borrower’s monthly payment to $0 per month for at least one year.If you are interested in lowering your student loan payments, you may consider federal options or explore private refinancing. How student loan refinancing works is that borrowers submit an application with a private lender requesting a new loan agreement for refinancing student loan debt.Refinancing federal student loans can allow borrowers to replace their existing federal loans with the terms and conditions of a private loan agreement. Private lenders can set their own underwriting standards, but some may require applicants to have steady income and good credit. For subprime borrowers, it might be difficult to refinance student loans with bad credit.Student loans can be federal or private, and borrowers may refinance both. The difference between private and federal student loans is that federal student loans are provided exclusively by the U.S. Department of Education. Banks, credit unions, online lenders, and select state-based or state-affiliated organizations may offer private student loans.Reviewing the pros and cons of refinancing student loans can help you decide whether refinancing is right for you. One of the advantages of refinancing student loans is it may provide you with a lower interest rate. One of the big disadvantages of refinancing student loans with a private lender, however, is you’ll be forfeiting federal benefits. Refinancing federal student loans will remove your access to income-driven repayment plans offered by the federal government.

Lowering Your Student Loan Payments

You may consider the following options if you’re a federal student loan borrower interested in lowering your student loan payments:

Consolidate Your Student Loans

Borrowers may consolidate their federal student loans into a Direct Consolidation Loan. Consolidation can merge all of your federal student loan liabilities into a single federal loan. It can also give you up to 30 years to repay your loans in certain cases. You may lower your monthly payment by consolidating into a longer repayment period.

Student Loan Forgiveness

Various elected officials have talked about broad student loan forgiveness of federal student loans. Several of the federal government’s student loan repayment plans can end with a borrower’s outstanding balance being forgiven at the end of the repayment period.Educators who teach in a low-income school may be eligible for up to $17,500 in federal student loan forgiveness under the Teacher Loan Forgiveness program. Student loan forgiveness can reduce or eliminate your student loan balance, but student loan forgiveness in some cases may also serve as taxable income.

Student Loan Refinancing

Borrowers may refinance federal student loans with a private lender. This means federal student loan borrowers may switch from a federal repayment plan to a private student loan refinancing payment plan. Refinancing into a longer repayment plan can reduce your monthly payment.As mentioned earlier, one of the big disadvantages of refinancing federal student loans is you’ll be forfeiting federal benefits. Refinancing federal student loans will remove your access to income-driven repayment plans offered by the federal government. Refinancing may not be right for you if you’re eligible for federal student loan forgiveness programs.

Student Loan Refinancing With Lantern

Student loan refinancing is a private arrangement that lacks federal benefits. Refinancing may provide a better interest rate for you, which can lower your monthly payments and total repayment costs.If you want to refinance your student loans, Lantern by SoFi can help. Explore your options today and consider applying with a lender of your choice.Find and compare student loan refinance options with Lantern.

Frequently Asked Questions

How much student loan debt is in the United States?

Can you lower your student loan monthly payments?

How do you know when you have too much student loan debt?

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Photo credit: iStock/RyanJLane

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About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and currently serves as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.

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