Drexel University, located in Philadelphia, PA, is one of the 15 largest private universities in the United States. Over 25,000 students are now enrolled in one of its degree programs.
Drexel’s popularity is due in large part to its unique experiential learning model. In 2018-2019, 5,426 of its students were employed at 1,551 unique co-op employers (including the Academy of Natural Sciences. The university has also forged international research partnerships in China and Israel.
Although Drexel is a fine university that has a strong track record of preparing its students for workplace success, it’s cost of attendance is also high. For the 2020-2021 academic year, first-year tuition alone is 2020-2021 is $53,868. Room and board and fees cost an additional $18,413.
To help cover these costs, many families are forced to take out Drexel student loans and/or Drexel Parent PLUS Loans. In this article, we’ll look at the most recent Drexel student loan statistics and discuss the best ways to pay off Drexel student debt.
Drexel University student loans: key statistics
The Department of Education’s College Scorecard provides school-level data about debt, repayment, and more to help students compare their options. Here are a few key Drexel student debt statistics from the website’s most recent data release.
- Median student debt (all students): $20,500
- Median student debt (Pell Grant recipients): $23,791
- Percentage of students that received student loans: 61%
- Typical monthly payment: $179 to $296 per month
It’s important to point out that these statistics don’t include any private student loans that students may have taken out. It also doesn’t include Drexel student loans that were taken out to help pay for a graduate or professional degree.
The above data shows that students who didn’t receive an income-based Pell Grant (84% of Drexel students) ended up with a very similar debt load as those who did. At first glance, this would indicate that the Drexel financial aid system is doing its job to promote equality.
However, the Drexel Parent PLUS Loan numbers throw cold water on this notion. Below, we’ll take a look at what the parent borrowing data shows.
Drexel Parent PLUS Loans: key statistics
The College Scorecard began including institutional-level data on Parent PLUS Loans in December 2020. Here are the key statistics that were reported for Drexel University:
- Median Parent PLUS Loan debt (all parents): $66,000
- Median Parent PLUS Loan debt (parents of Pell Grant recipients): $42,542
- Percentage of parents who took out loans: 5% to 15%
- Typical monthly payment: $710
There are two interesting tidbits to note. First, the median debt for parents of Drexel students is far higher than the median debt for the students themselves. Second, the parents of students who received Pell Grants had a median debt that was over $23,000 lower than the overall median.
With lower annual incomes, you might expect that the parents of Pell Grant recipients would need to borrow more. But the opposite is actually the case. Many parents with middle-to-high incomes are taking on heavy debt loads to make up for the limited Drexel financial aid available to their children.
Pay off Drexel student loans: Top options for parents and students
There is no one-size-fits-all solution for Drexel University student loans. The best option for you will depend on your situation and goals. Below we discuss how students and parents can accomplish four of the most common debt objectives.
To cap your monthly payments: join an income-driven repayment plan
If you’re currently dealing with a low income or job insecurity, joining an income-driven repayment (IDR) plan could be a smart move. By doing so, you’ll guarantee that your monthly payments will never exceed a certain percentage of your discretionary income.
The Department of Education currently offers four IDR plans. Here’s what each offers:
- Revised Pay As You Earn Repayment Plan (REPAYE): Generally pay 10% of your discretionary income and receive forgiveness on your remaining balance in 20 to 25 years
- Pay As You Earn Repayment Plan (PAYE): Generally pay 10% of your discretionary income and receive forgiveness on your remaining balance in 20 years
- Income-Based Repayment Plan (IBR): Generally pay 10% to 15% of your discretionary income and receive forgiveness on your remaining balance in 20 to 25 years
- Income-Contingent Repayment Plan (ICR): Pay the lesser of (A) 20% of your discretionary income or (B) what you would pay on a fixed 12-year repayment plan. Receive forgiveness on your remaining balance in 25 years
Typically, StudentAid.gov defines discretionary income as the difference between your annual income and 150% of the poverty guideline for your family size and state. The difference is reduced to 100% for the ICR plan. If your income ever falls below the poverty guideline for your family size, your payments will be $0.
Unfortunately, Parent PLUS Loans aren’t able to be repaid on any of these plans. However, Parent PLUS Loan borrowers can become eligible for the ICR plan after a Direct Loan Consolidation. And some may be able to take advantage of a double consolidation loophole to qualify for the other three IDR plans.
To avoid unpaid interest accumulation: stay on the standard 10-Year plan
IDR plans provide a lot of payment flexibility, but they also have a downside. You’re likely to pay a lot more money in interest charges over the life of your loans with IDR.
Unpaid interest accumulates any time you make a payment on a federal student loan that is lower than you would have made on the 10-Year Standard Repayment Plan. And that unpaid interest will capitalize in the following circumstances:
- You voluntarily leave the REPAYE, PAYE, or IBR plan (or forget to recertify your income)
- You no longer qualify to make income-based payments on PAYE or IBR (or forget to recertify your income)
- You’re on the ICR plan (unpaid interest capitalizes annually with ICR)
Even if you’re able to avoid interest capitalization, paying down your Drexel student loans on an IDR plan will almost always result in you paying more interest overall.
For example, let’s say you borrowed $70,000 of Drexel Parent PLUS Loans at an average interest rate of 6.00%. You make $75,000 per year and estimate that you’ll enjoy an annual salary growth rate of 3%.
At your $75,000 starting salary, the old IBR plan wouldn’t even reduce your monthly payments by $100. But we’ll assume that you’re able to join the REPAYE or PAYE plans by taking advantage of the double consolidation loophole. By the time you reach the end of repayment, you’ll have paid $22,685 more than you would have paid on the 10-year plan.
Some readers may be thinking to themselves, “But why wouldn’t you just refinance if you plan to pay down your student loans in 10 years anyway?” For some borrowers, this would definitely be the best choice.
However, if you have poor or damaged credit or a high debt-to-income ratio, refinancing may not be a viable option. And, in these cases, sticking with the 10-year standard repayment plan (and/or making extra payments toward principal) is likely the best way to minimize the overall cost of your Drexel student loans.
To pursue forgiveness: join an Income-Driven Repayment plan
If you have a public service or non-profit job, you may qualify for a federal student loan forgiveness program such as Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness.
With PSLF, you could have the entire remaining balance of your federal student loans after 10 years (120 qualifying payments). With Teacher Loan Forgiveness, you could earn forgiveness in just five years, but the amount is capped at $17,500 and Parent PLUS Loans aren’t able to become eligible.
If you’re pursuing a federal forgiveness program, you’ll want to join an IDR plan to maximize the amount of forgiveness you can receive. The goal is to pay as little as possible on your loans until you qualify for forgiveness.
Again, let’s assume that you have $70,000 in Drexel Parent PLUS Loans at an average interest rate of 6.00%. But, this time, we’ll add in PSLF eligibility to the Student Loan Planner calculator. The results show that PSLF could save you $49,985 to $72,670 over every other repayment option.
This example clearly demonstrates how valuable PSLF can be. However, it should be noted that Parent PLUS borrowers will need to consolidate their loans to become eligible for PSLF and must be working for a qualifying public service employer themselves (not the student).
To reduce your interest rate: refinance with a private lender
If you have a high income, IDR will be less valuable to you. And if you don’t work for a qualifying public service employer, federal forgiveness won’t be an option.
Borrowers in this situation have two main options. First, they can stick with the 10-Year Standard Repayment Plan. Or they can try to refinance their Drexel University student loans with a private lender.
If you have less-than-stellar credit, you may need to stay on the Standard Repayment Plan. It could also be the safer choice if you’re dealing with career instability and don’t want to give up federal protections (like forbearance and deferment) or the ability to join an IDR plan down the road.
On the other hand, if you have a good credit score and only expect your income to rise in the future, refinancing could be a sound financial decision. Refinancing is the only way to reduce your interest rate if you have federal student loans.
Returning to our example one final time, let’s say that you could refinance your $50,000 of Drexel Parent PLUS Loans at 3.5%. By doing so, you’d save $10,193 to $32,878 over your other repayment choices.
If you’re looking to refinance Parent PLUS Loans, some lenders will even allow you to transfer them into your child’s name. And Student Loan Planner has negotiated some of the highest refinancing cash bonuses online. Aim to get quotes from at least three refinancing lenders before making your decision.