How Long Does It Take To Pay Off Student Loans?

by Emma Cueto

It's a question every Millennial is trying not to think about too much: How long will it take to pay off my student loans? And although that number is obviously going to vary for everyone, the bigger question we should all be worrying about is how long we'll have to keep working, because all that money you're pouring into student loan payments is stealing directly from your savings and retirement fund. So if you had any dreams of retiring at 65 and traveling the world (or maybe just getting some sleep), think again — because according to a new study by Nerd Wallet, the Class of 2015 probably isn't going to be able to retire until age 75.

This, compared to today's average retirement age of 62, according to a Gallup poll.


Now, to be clear, most people will have paid off their student loans before age 75. (The news isn't quite that dire.) But retirement also requires you to have some decent savings, especially since people are living so much longer nowadays, and it's hard to save money when you're making loan payments every month. Plus, money you save earns interest while in your savings account — so you're not just missing out on the $35,000 that the average 2015 graduate has, or on the amount of interest it will amass on a standard 10-year repayment plan. You're also missing out on all the interest that money would have earned you over the next 40 or 50 years.

In fact, according to Nerd Wallet, over the course of half a century, 2015 graduates will miss out on a total of $684,474 in retirement savings. So there goes your "retire and see the world" money.

And to make matters even worse, it seems that things are only getting worse. Nerd Wallet estimates that the average retirement age for the Class of 2013, for instance, is only 73 ("only" 73). Which is quite a jump in just two years. And a combination of rising student loan debt, the rising cost of rent, and the fact that average starting salaries for college grads aren't growing at the same pace means that the average college grad is going to have to push retirement further and further back.

At this rate, the Class of 2025 will be retiring in their 80s. So if there ever was a reason to fix the student loan debt crisis and make college more affordable, that sounds like it.

In the mean time, the best thing us broke Millennials can do to be proactive is to save whatever we can now. As Kyle Ramsey, investing manager at NerdWallet explains it, “The two most important things Millennials can do is save more and save early. Compound interest is a powerful force that can build a comfortable nest egg. For example, if a 23-year-old invests $10,000 at a 6 percent return today, it could be worth twice that amount by the time he is 35 years old and 20 times that by the time he is 75.”

Of course, the cost of living is rising, while wages are not; indeed, according to the Employee Benefit Research Institute, almost a third of workers in 2015 have no retirement savings as a result. So the question then becomes, how do you save when your entire paycheck basically goes to paying off bills? It's not easy, but it can be done. The Motley Fool, for example, has a set of three (just three!) tips that might help you stop living paycheck to paycheck, and they're definitely worth checking out. While it's worth noting, as The Motley Fool does, that these tips may not work for everyone and every situation, doing things like un-automating your spending (that is, cutting out automatic renewals — think recurring monthly payments like your online television and movie streaming subscriptions) will actually go relatively far when it comes to giving you a little bit of a cushion. And as the Chicago Tribune points out, it's never too late — being 47 and not having any retirement savings isn't an irreversible situation.

So if you have any spare cash lying around that hasn't been devoured by student loan payments and rent, go put that to work. And if not, I guess we all just have to hope that wages start rising soon. Otherwise, we might be a little screwed.

Sorry, guys!

Image: Giphy