How Much Will My Student Loan Payments Be?

As college consultants, we’re often asked how much student loan payments will be. After all, it is something that should factor into the college search; you want to be able to afford to pay for your education after graduation and still have a life!

But, this is a very loaded question, and a topic that we feel deserves some deeper discussion before we just dive into numbers.

The Bigger Prospect of Taking Out Loans for College

For us, the right college is one that is a SAFE fit for the student. By SAFE we mean socially, academically, financially, and emotionally. We include financially in this formula because it plays such a big part in how you (the student and the student’s family) will live life after graduation.

We work with a lot of students and families and we want them to truly understand what the ramifications are for taking out loans. As adults, we have a better grasp on how $100,000 in loans could financially strap us for decades. But students don’t really understand what that means. They don’t understand how difficult that amount could be to pay back over time, or even what it would cost to rent an apartment and live on their own. So being proactive in understanding what you and your family are willing to, and can, pay for college education is paramount. It is something that we encourage families to talk about early on in high school, in ninth grade and maybe even before, but definitely in the ninth and tenth grade time frame, before you start to look at colleges.

There are many people who start the college journey late in the game in junior year or summer after junior year or even fall of their senior year. You do NOT want to wait until then to talk about what you are willing to and can afford to pay for college education with your child.

We also know families who say, “We’ll do whatever we have to do to have Joey go to college.” This type of thinking can have significant ramifications. Parents maybe can’t retire when they had planned to because they have strapped themselves with essentially another mortgage. Or the student who decides to go to a school that they’ve been wanting to go will have to take $100,000 or more out in loans. We can’t stress enough how important it is to discuss the financial fit early on in the process.

Some Examples of How Much Student Loan Payments Will Be

If you’re going to take out student loans, the first type of loan to consider is the Federal Direct Student Loan. The allowable amounts for this type of loan are $5,500 the first year, $6,500 for sophomore year, and $7,500 for the third and fourth years, totaling $27,000. This is the lowest interest loan you’re going to be able to get as a student. Currently the interest rate is a little over 3%. Last year it was around 2.5%. And this loan is in the student’s name, no one cosigns for it.

With the Federal Direct Student Loan, the student does not have to start paying it back until six months after they get out of college. If you qualify, then part of that loan can be subsidized, which means the federal government will pay the interest on that loan while the student is in college. So, essentially it’s kind of like getting free money.

Now, let’s analyze a student loan payment example. Let’s say that you are going to attend a school that costs $60,000 a year and your parents don’t qualify for financial aid. The school has given you $20,000 in Merrit money, so that brings the cost down to $40,000 a year. Your parents say they can only afford to put $15,000 towards your college education each year. That means if you go to that school, you’re going to have to take out loans for $25,000 a year for four years. And we hope that you graduate within four years because that doesn’t always happen. But, let’s say for these purposes you graduate in four years. $25,000 for four years is $100,000 right. Compound interest on the loans could increase that amount by another $10,000, but for the sake of this example, we’re going to stick to the $100,000 amount.

We want to direct you to a program that we use with our students called Debt Salary Wizard on With this tool you can see how much your loan payments are going to be on that $100,000 with an estimated interest rate and a repayment period. You can also see how much you can afford to borrow in student loans based on an expected salary amount.

For our example, let’s say you have a 4% interest rate (which, by the way, is low because the interest rate that you get from a private loan is going to be much higher than that) on the $100,000 and a repayment period of 10 years. You would then have an estimated monthly payment of $1012 and your required salary to pay that amount would be $151,000. Maybe .001% of students come out of college making that kind of money, and there’s plenty of people who won’t make that in a lifetime.

If you had borrowed $75,000 over the four years and had a 4% interest rate and a 10 year repayment period, your monthly payment would be $759 and your required salary for that amount if you’re going to live on your own and have to make payments for food, electric, rent and car insurance is $113,000. Again, we don’t know a lot of students coming out of college making that kind of salary.

Now let’s say you borrowed $25,000 with the 4% interest rate and 10 year repayment period. Then your monthly loan payment would be $253 and your required salary would be $37,966, which would be more in line with what you could expect to make right out of college.

To Sum Up Student Loan Payment Amounts

As you can see from the figures above, the moral of this story is to go to a college that fits you not only socially, academically and emotionally, but also financially. There are many colleges out there for you. Don’t strap yourself with debt. We cannot stress this enough. We have had graduates come to us after the fact and ask how to get rid of their loan payments and we tell them you don’t, you have to pay it back.

We hope this has helped shed some light on taking student loans out and being very responsible about it. There’s all different ways to attend college and you don’t want to be strapped down with overwhelming loan payments in your adult life.

Looking for help with the college search and application process? We help students and families through the entire college planning journey – from search, applications and essays to interview prep, financial aid consultation and final school selection.

Contact us at or by phone, 845.551.6946. We work with students in person, through Zoom, over the phone, and by email.