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There’s a 94% Chance Your Final Student Loan Payment Will Look Like This
Almost everyone who has successfully repaid their student loan debt has two things in common: They paid the debt off early, and their final payment was a lump sum well above the minimum due.
That’s according to a new study from the Consumer Financial Protection Bureau (CFPB), the government watchdog tasked with monitoring the financial service industry on behalf of consumers.
The CFPB study looked at about 270,000 borrowers who paid off at least one student loan between January 2013 and October 2017. It found that 94% of the borrowers did so by making a large final payment. On average, that payment was 55 times their minimum due.
Only 6% of borrowers who repaid their debt did so by following the payment schedule provided by a student loan servicer.
The financial situations for such a large sample of people varied widely, but the CFPB inferred that most people probably started to earn more money, making it easier to pay above the minimum due on their loans.
Others were likely building their savings as they paid down their debt and finally saved enough to make a large payment and put the student loans behind them.
Whatever the reason for the large payments, it seems those people who pay down thousands of dollars in debt in just a few years are more common than they seem.
Desiree Stennett (@desi_stennett) is a senior writer at The Penny Hoarder. She writes about how government and court actions impact your wallet.