Dealing With Debt: 1992-93 Bachelorís Degree Recipients 10 Years Later - Repayment of Undergraduate Loans

Repayment of Undergraduate Loans

Bachelor’s degree recipients who do not immediately enter graduate school typically must begin making monthly payments on their loans 6 months after they finish college. The standard repayment period is 10 years, with a minimum monthly payment of $50, but alternative repayment plans exist to help borrowers who have difficulty meeting their repayment obligations.

Among bachelor’s degree recipients who did not enroll in a graduate or first-professional degree program, most appeared able to handle their debt: 74 percent had repaid all their undergraduate student loans by the time they were interviewed in 2003 (table 6). This group includes borrowers who had completed repayment in less than the standard 10 years because they had borrowed relatively small amounts and were required to repay a minimum of $50 per month, borrowers who graduated early in the 1992–93 academic year and had used up their time to repay, and borrowers who, for reasons of their own, decided to pay their loans off early. While 26 percent still owed, it is important to note that June graduates who were on the standard 10-year repayment plan for federal loans and had borrowed more than about $4,000 would not be expected to finish repaying their loans until December 2003 (i.e., after they were interviewed).

The percentage who still owed ranged from 5 percent among those who had borrowed less than $5,000 to about 42 percent among those who had borrowed $10,000 or more. The percentage who still owed also varied with income. For example, 33 percent of those with salaries in the lowest income group in 2003 still owed, compared with 19 percent of those with salaries in the highest income group. The average monthly payment was $150, but 11 percent were paying $250 or more (table 9).