What Is the Monthly Payment on a $20,000 Student Loan?

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In a few weeks, federal student loan borrowers will start doing something they haven’t done in about three-and-a-half years: pay back their loans. The payment pause that went into effect in March 2020 in response to the COVID-19 pandemic officially ends in October 2023, which is when payments will resume for tens of millions of borrowers.

The resumption of payments will be especially tough on cash-strapped borrowers who were banking on the Biden loan forgiveness plan to cancel up to $20,000 in debt. That plan, announced in August 2022, was struck down by the U.S. Supreme Court earlier this summer after months of legal battles.

The bottom line for borrowers is that they will be gearing up to pay monthly budget items they haven’t had to think about in a long time. For those with $20,000 in student loan debt, that monthly payment could be substantial. It all depends on your interest rate and the length of the loan.

Interest rates on federal loans might range from less than 3% to more than 7%, according to the U.S. Department of Education’s Federal Student Aid website.

In its most recent update, Federal Student Aid said the fixed interest rate is 5.50% for direct subsidized and unsubsidized undergraduate loans first disbursed after July 1, 2023. That was up from 4.99% for loans first disbursed between July 1, 2022, and June 30, 2023. The rate for Direct PLUS Loans was 8.05% for loans first disbursed after July 1, 2023 — up from 7.54% for loans first disbursed between July 1, 2022, and June 30, 2023.

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As previously reported by GOBankingRates, the average monthly payment on all student loans — including private loans — was estimated at $460 as of 2022, according to EducationData.org. The average borrower takes 20 years to repay their student loan debt and accrues $26,000 in interest over 20 years at the rounded average interest rate of 6%.

If you want to know the monthly payment on a $20,000 student loan, you can use an online loan calculator, which many states offer on their websites. Based on recent interest rates and repayment terms, here’s what a typical payment might look like:

  • $20,000 loan over 20 years at 5.50%
    • Total payment: $33,018
    • Total interest: $13,019
    • Monthly payment: $138
  • $20,000 loan over 20 years at 8.05%
    • Total payment $40,298
    • Total interest $20,299
    • Monthly payment $168
  • $20,000 loan over 20 years at 4.99%
    • Total payment: $31,651
    • Total interest: $11,651
    • Monthly payment: $132
  • $20,000 loan over 20 years at 6.0%
    • Total payment: $34,388
    • Total interest: $14,389
    • Monthly payment: $143

If those monthly payments look low compared to what most borrowers pay, it’s because most borrowers carry a lot more than $20,000 in student loan debt. As of March 2023, the average federal student loan debt in the United States was about $37,720, according to a BestColleges analysis of Education Department data.

For that amount, the payment on a 20-year loan at 6% interest would be $270 a month. For a 10-year loan, the monthly payment would be $419.

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