Understanding Repayment Periods on Private Student Loans

Paying back private loans you took out during college can take forever, or so it would seem to the graduate who's repaying. The repayment period on private student loans could be as long as 15 or even 30 years. The repayment period and interest rate terms are the two major factors that determine how long it takes you to pay off your loan — and at what cost.

To determine your repayment terms,

  • Check your contract or call your loan company: You need to know if your loans require you to make payments for 1, 5, 15, or 30 years. But don't rely on what is said over the phone alone. Most likely, you'll be given accurate information regarding the term length and late-fee rules, but you don't want to risk it. A customer service associate could accidentally misstate something.
  • Get it in writing: Have your lender fax or mail you the contract so you know exactly what your terms of loan repayment are. Also, by having the terms in writing, you don't have to worry about forgetting or confusing what was said to you over the phone when you're overloaded with the terms of three or more different bank loans.

Remember: If you didn't make your payments for a period of time during the course of your repayment term, interest still accrues without a payment being made to counteract it. Late fees may have also been charged. Thus, your repayment period may also have been extended.

If you're in a situation where you're behind on your payments, ask your loan company how long it would take to repay the loan if your payments stayed on course. Use the following checklist to find out what you should ask your loan company to see when your loan will actually be paid off if you make all your payments on time from this point forward:

  • How long is your current repayment period?
  • How long was it originally?
  • How did late fees and interest rate hikes alter the length of repayment in the past?
  • How long could it alter repayment in the future?
  • Where are the repayment rules located in the contract? Do you have a copy of the rules you can send me?