Monthly student loan payments usually range between 5-15% of graduate’s income after they enter the workforce. (1) Ouch.
The amount of the monthly payment varies based on the amount borrowed and the interest rate. Average interest rate really depends on the type of loan and the first disbursement date of the loan (the date the borrower can start getting the loan money). Interest rates range from 5.05-7.06%. (2)
For example, if a student borrowed $45,000 over their 4 years with a 6% interest rate, they’d have to make 10 years of monthly payments at $500 per month. The recommended annual salary for making “manageable” payments at that rate is roughly $75,000. (3)
So what happens if those payments didn’t exist?? What could that money do to work for you and towards your dreams of financial security? The typical loan payment is between $200 and $300 per month. If a 21 year old graduate started investing $250 per month with a 10% return instead of putting that money toward a payment, they’d have $2,612,924 by the time they retire at age 67!