Loan term myths, debunked: What borrowers really choose

By Willa Tellekson-Flash | Published on November 13, 2025

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When it comes to refinancing student loans, many people assume there’s only one right answer: pick the shortest term and pay it off as fast as possible to save the most on interest.

But that assumption doesn’t reflect how real borrowers approach repayment. According to Earnest data, nearly half of all refinancers (49.5%) select a 10-year loan term—significantly more than the 31.5% who choose a 5-year term.

These borrowers aren’t settling for longer terms. They’re making thoughtful, informed decisions based on their budgets, goals, and life stages. Let’s break down three common student loan term myths and take a closer look at how real people are navigating repayment today.

Myth #1: Everyone chooses the shortest student loan term

Fact: Nearly half of Earnest borrowers actually pick a 10-year term, not a 5-year term. Shorter terms mean higher monthly payments, which isn’t realistic for many budgets.

A 5-year term might seem like the obvious choice—faster payoff, less interest—but it’s not the most common. According to Earnest data, only 31.5% of borrowers refinance into a 5-year loan, while 49.5% choose a 10-year term.

Why the difference? Shorter terms typically mean higher monthly payments, which may not be practical for every budget. Many borrowers, especially those early in their careers or balancing other expenses, opt for terms that offer a steadier monthly cost while still making progress toward payoff.

Here’s a quick snapshot of how borrowers split across term options:

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Rather than defaulting to the shortest path, borrowers are selecting repayment timelines that fit their current needs and future goals.

Myth #2: Long terms are always a bad idea

Fact: Longer terms can be a strategic choice. They lower monthly payments and give borrowers more flexibility to manage other financial goals.

There’s a misconception that choosing a longer repayment term is financially irresponsible—that it means you’ll pay forever and fall behind.

In reality, longer terms can be a strategic choice that supports flexibility and peace of mind. Whether it’s a 12- or 15-year loan, spreading payments out over more time lowers your monthly obligation. That frees up cash for emergencies, investments, or life transitions.

Nearly 10% of Earnest borrowers refinance into a 15-year term. For those borrowers, a longer loan term may simply be a more sustainable approach.

Myth #3: Your loan term doesn’t change your total cost

Fact: Your repayment term directly impacts how much you’ll pay over the life of the loan, even if your interest rate stays the same.

With a longer term, interest has more time to accrue. The longer your loan lasts, the more you’ll likely pay overall.

Let’s say you refinance a $30,000 loan at 5% interest. You could pay:

• ~$4,000 in interest over 5 years
• ~$8,200 over 10 years
• ~$12,700 over 15 years

For illustrative purposes only

Shorter terms can lead to big savings in total repayment—but only if the monthly cost works for your budget. That’s why it can be helpful to run the numbers based on your own financial situation.

How to decide how long your student loan term should be

There’s no universal “best” loan term. The best loan term is the one that aligns with your financial life.

Not sure how long your student loan term should be? Here are a few questions to help guide your decision:

• Do you want to minimize total interest or prioritize a lower monthly payment?
• How stable is your income right now?
• Are you balancing other financial goals, like saving for a home or investing?
• Would extra flexibility bring peace of mind?

Find your fit with our loan term calculator

There’s no one-size-fits-all solution—and that’s a good thing. Whether you’re refinancing into a 5-year sprint or a 15-year stretch, the best loan term is the one that supports your life, goals, and financial confidence. Use our student loan payment calculator to estimate your monthly payments and see how different terms stack up.

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About the Author

Willa Tellekson-Flash

Willa Tellekson-Flash is a freelance writer and product marketer specializing in finance and technology. With 10 years of experience, she focuses on making complex personal finance topics accessible and empowering for all audiences. When she’s not writing, you'll likely find her training for her next marathon.