Pittsburgh Post-Gazette

Will I still be paying off my student loans when I’m 64?

It’s a question that certainly never occurred to Paul McCartney, but is becoming a possibility for some students and recent graduates. Spurred by recent waves of student-loan consolidations and lengthened loan terms, student borrowers are pushing scheduled payoff dates into their 40s, 50s and even 60s.

Over the last two years, millions of current students and graduates consolidated their federal student loans to lock in record-low interest rates. As they did so, virtually all borrowers took their lenders up on an option to extend the payment period of their loan _ from a 10-year payoff term to one of 20 or 25 years, or even longer. The result was much smaller monthly payments, but for a much longer time.

"Everyone pretty much goes for the maximum, which can be 30 years," said Tom Lustig, vice president of PNC’s Education Loan Center. "One-hundred percent, really, are taking the maximum term."

Extended payment periods are attractive because borrowers’ monthly payments drop substantially. On a federal loan of $20,000 _ just above the national average loan amount for a four-year undergraduate degree _ a borrower with a 4.75 percent interest rate would pay $210 per month on a 10-year loan, versus $129 per month for a 20-year loan.

For graduate and professional students with high loan balances, the difference is even more dramatic. On a federal loan of $60,000, a borrower would pay $629 per month at 4.75 percent interest over 10 years, versus $313 over 30 years.

Of course, those smaller monthly payments come at a cost of higher total interest payments. The $20,000 borrower would pay more than $5,800 more in interest for the extra 10 years, and the $60,000 borrower would pay nearly $37,200 more for the extra 20 years.

Those extra interest amounts frighten Victoria Racz, 28, who is getting her doctorate in international relations from the University of Pittsburgh.

Racz already has about $29,000 in student loans from her master’s degree. When she’s done with her doctorate, her loans will total $50,000 or $60,000 or more, depending on how long she takes to complete her degree.

"I don’t like debt," she said. "It really makes me uncomfortable. I’d like to pay them off as soon as possible"

Even though she could qualify for a deferment because she’s in school, she’s still paying her master’s loans and is about two years ahead of her scheduled payoff time. But she knows that paying off loans for her doctorate will probably take her into middle age, at least.

"I’ll probably be at least 40, unless I marry that really, really handsome dentist in my dreams," she said.

Dave Jang, 27, knows more about student loans than most of his peers. He has consolidated his loans twice, and can quote interest rates and repayment plans off the top of his head.

"I have to," he said of his encyclopedic loan knowledge. "I have a quarter-million dollars."

Jang graduated this spring from medical school at Tufts University near Boston, and just started a residency in emergency medicine at the University of Pittsburgh Medical Center with about $260,000 in student loans.

He doesn’t have to start paying loans until he finishes his residency, but once he does, he’d like to pay them off in 10 years. But he knows that’s a steep financial path, even for a doctor.

"It’s a lot," he said. "If I do the 10-year plan, it’s $2,800 per month, which is like a mortgage."

What concerns financial experts is that student-loan payments that are "like a mortgage" might come at the expense of an actual mortgage or other financial steps such as saving for retirement or a child’s college fund.

"We don’t really know what effect this (run-up and stretching-out of student debt) is going to have, financially and psychologically," said Robert Shireman, executive director of the Washington-based Project on Student Debt. "Paying off those student loans can be a signal to start saving for retirement, or start putting away money. We’re pushing those off in the future and we’re going to see different patterns."

Indeed, twenty-somethings today often have a different view on debt than their parents. New options for 50-year mortgages, 10-year car loans and 30-year student-loan payments can turn debt into a life sentence.

"If you look at the way financial transactions are structured these days, the likelihood that you’ll ever pay them off is slim," said John Lamb, co-author of an upcoming edition of "Solve Your Money Troubles."

"People have just come to accept that they’ll have a certain amount of debt that will be with them forever."

(Anya Sostek can be reached at asostek(at)