Confused About Your Student Loans? You're Not Alone : NPR Ed Here are the tips, tools and calculators that can help make sense of all that debt.
NPR logo

Confused About Your Student Loans? You're Not Alone

  • Download
  • <iframe src="https://www.npr.org/player/embed/465556666/466743091" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Confused About Your Student Loans? You're Not Alone

Confused About Your Student Loans? You're Not Alone

  • Download
  • <iframe src="https://www.npr.org/player/embed/465556666/466743091" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

RACHEL MARTIN, HOST:

Are you still paying off student loans? If so, listen up. Today, the average student borrows about $35,000. Add a graduate degree and you can easily leave school more than $100,000 in debt. Many young Americans are saddled with hefty monthly payments, and economists say they're delaying buying homes and starting families. Happily, there are programs out there to help people pay back their loans. Acacia Squires from the NPR Ed team stopped by to talk about students and their debt.

ACACIA SQUIRES, BYLINE: There was a recent survey from LendEDU, which is an online resource for people who have student loans, that showed a couple of surprising numbers. Number one, only about 8 percent of students could tell you what their interest rates were. Only 6 percent of students surveyed could tell you what their repayment terms were.

MARTIN: What? I mean, we can't just say that this is because they don't have the resources to understand these things. I mean, the information's out there. They just don't know how to find it or they're choosing not to.

SQUIRES: The information is out there, but it's really complicated. I have to say, I'm somebody with student loans myself and I've been navigating this world for a long time.

MARTIN: All right, walk back in time to 2014. You were watching the State of the Union and something caught your ear. Tell me about that.

SQUIRES: I was watching the State of the Union for work, I should say. So I was listening very attentively. And at one point, President Obama said something like we're making it possible for millions of people to lower their monthly payments for student loans to 10 percent of their income. I did some quick sort of back-of-the-napkin math, and I realized I was paying more like 40 percent of my income every month in student loans.

MARTIN: Wow. What are the resources out there to fix that?

SQUIRES: It turns out that he was talking about one of a handful of different repayment options that are tied to your income. They're called income-driven repayment plans. And what they do is they take into account the money that you make in order to calculate every month what you pay back.

MARTIN: So walk me through just one of them. Like, what's an example of a really good resource people should know about?

SQUIRES: OK, so one of them is studentloans.gov. They've got a loan calculator that you can input your information into. You tell them how much you make every year, what interest your loans are at and how much outstanding debt you have. Then they do a calculation and they tell you all of the different ways that you can pay back your loans. So just as an example, Rachel, I put in a couple of what seemed like pretty average numbers. For the standard repayment plan, it's asking that you pay back $462 a month. For the pay as you earn plan, which is what President Obama was talking about, it's $186 a month.

MARTIN: That means, though, they're going to pay that for more years. The life of their loan extends.

SQUIRES: Exactly. The life of the loan extends, but I should say, too, that a lot of these programs, including pay as you earn, come with a forgiveness option. So after 20 or sometimes 25 years, your loans can be forgiven.

MARTIN: But you have to qualify. Not everybody qualifies for that.

SQUIRES: Not everybody qualifies. And we should be very careful in saying that these are for federal loans, not private loans that you take out from a bank.

MARTIN: OK, clearly the federal government understands that this is an issue. What are they doing to be more transparent about these different resources?

SQUIRES: Yeah, there's a lot of pressure right now on the U.S. Department of Education to be more transparent, to advertise these programs to borrowers and to get servicers on board to do the same thing. The Consumer Financial Protection Bureau last year opened up a public forum to ask borrowers what kinds of issues they were running into, and they got more than 30,000 comments. So now they have a lot of ideas on how they can move forward and fix these things.

MARTIN: NPR's Acacia Squires from the NPR Ed team. Thanks so much, Acacia.

SQUIRES: Thank you for having me, Rachel.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.