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How Many Years Will It Take to Pay Off Your Student Loans?

  +Follow August 21, 2013 7:07AM
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It’s almost fall and parents will soon send their kids off to college. While the incoming freshmen enter schools with gleaming optimism, graduating seniors have their hands on their heads wondering how they will pay off their student loans. 

Increasing tuition costs and the economic recession have put a heavy strain on students to take out more loans in order to pay for their education. However, students may be taking out loans without realizing the magnitude of debt they're putting themselves in. According to a survey by Fidelity, the class of 2013 accumulated an overwhelming average of $35,200 in college-related debt by the time they graduated. This number includes student loans, personal debt, and credit card debt. In addition, 39 percent of students said that they would have looked for alternate ways to pay for school or saved more money during college.

If a college graduate took 15 percent of his or her annual income to pay off his or her loans, these are the number of years it would take for them to pay off the average college debt of $35,200 with a 6.8 percent interest rate. This is based off of the average starting salaries by discipline from from the National Association of Colleges and Employers (NACE). These estimations were calcuated using the FinAid.org loan calculator.

Engineering: 4.3 years (Annual salary of $63,000 per year)

Cumulative Payments: $40,705.87. Total Interest Paid: $5,505.87

Computer Science: 4.6 years (Annual salary of $60,000 per year)

Cumulative Payments: $41,037.90. Total Interest Paid: $5,837.90.

Business: 5.2 years (Annual salary of $54,000 per year)

Cumulative Payments: $41,842.15. Total Interest Paid: $6,642.15.

Communications: 6.9 years (Annual salary of $43,000 per year)

Cumulative Payments: $44,115.93. Total Interest Paid: $8,915.93.

Math and Sciences: 6.9 years (Annual salary of $42,700 per year)

Cumulative Payments: $44,200.68. Total Interest Paid: $9,000.68.

Education: 7.6 years (Annual salary of $40,000 per year)

Cumulative Payments: $45,043.38. Total Interest Paid: $9,843.38.

Humanities and Social Sciences: 8.3 years (Annual salary of $37,000 per year)

Cumulative Payments: $46,192.74. Total Interest Paid: $10,992.

These numbers show that current college students need to be smart when taking out loans and consider their majors carefully or they could face over $10,000 in just interest fees.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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  +Follow August 21, 2013 7:07AM
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