Reviewed by Editorial Note: Forbes Advisor partner links provide us with a commission. Commissions do not affect our editors opinions or evaluations.
The past 30 years have seen a steady rise in the price of college. Over that period, tuition at public four-year colleges increased from $4,160 to $10,740, while tuition at private nonprofit institutions increased from $19,360 to $38,070 (inflation-adjusted). The need for student loans and other forms of financial aid has increased along with costs.
Today, more than half of students leave school with debt. This graph shows the typical student’s borrowing amount, the most popular loan kinds, and the repayment schedule for those loans.
Total student loan debt statistics
As of the first quarter of 2023, student loan debt in the U.S. stands at a total of over $1.77 trillion. More than 92% of this is federal student loan debt while the remaining amount is owed on private student loans, according to Federal Student Aid (an office of the Department of Education).
In the 2020-2021 academic year, 54% of bachelor’s degree students who attended public and private four-year schools graduated with student loans, according to the College Board. These students left school with an average balance of $29,100 in education debt. USA TODAY Blueprint may earn a commission from this advertiser.
Average federal student loan debt
The majority of student loan debt in the U. S. is made up of federal student loans. The total federal loan portfolio is more than $1. 6 trillion. This is distributed among approximately 44 million debtors, per Federal Student Aid.
Here’s how much borrowers owe by federal student loan type:
Average private student loan debt
As of the third quarter of 2022, only 7.22% of the total national student loan debt comes from private student loans, according to Enterval Analytics. These loans are issued by private institutions like banks, credit unions and online lenders.
Over $13 billion in private student loans were taken out by students in the 2021–2022 school year. Of these students, 2010% graduated with a bachelor’s degree (E2%80%99) from a public four-year school, and the remaining students owed $32,100 in private student loan debt. Approximately 42,000 students who attended four-year private schools graduated with $42,800 in private loans.
Private student loans typically have stringent income and credit requirements, in contrast to the majority of federal student loans. As a result, the majority of applicants for private loans do so with a co-signer. According to Enterval Analytics, approximately 2091 % of private undergraduate loans and 2066% of private graduate loans had a co-signer during the 2020–2022 academic year.
The crisis of student loan debt in the U.S.
Total student debt in the U. S. has increased over the last 15 years, almost tripling from more than $619 billion in the first quarter of 2008 to more than $1 77 trillion in the first quarter of 2023, the Federal Reserve reports.
Many borrowers find it difficult to repay their student loans and are unable to pursue other life goals, like purchasing a home or starting a family, as a result of this debt increasing as average wages have decreased. In addition, student loan defaults and delinquencies are more frequent than other debt categories.
Additionally, as of 2021, 40.4 million student loan borrowers left school without completing a degree, according to the National Student Clearinghouse Research Center. This means that many borrowers don’t enjoy the higher earnings that a college education can bring.
Average student loan debt by year
Although there isn’t much information available about the average amount of debt incurred by private students each year, more than two-thirds of all student debt is comprised of federal loans. These are the trends in the average federal student loan debt growth from 1995 to 2017, according to the most current Congressional Budget Office data.
Who has student loan debt?
Borrowers’ total debt from student loans varies depending on a number of factors. An overview of the typical student loan debt by state, age, gender, and race/ethnicity is provided below:
Average student loan debt by state
The most recent data from The Institute for College Access and Success shows that the average student loan debt for the graduating class of 2020 ranged from $18,344 in Utah to $39,928 in New Hampshire.
Below is a breakdown of average student loan debt by state for college graduates:
Average student loan debt by age
Based on Federal Student Aid data, the following chart illustrates how federal student debt loads vary by age group in 2023:
Average student loan debt by gender
There is a gender disparity in the burden of student loan debt. Women borrow more money overall for education, and they are responsible for almost two thirds of all student loan debt in the United S. , according to the American Association of University Women (AAUW).
After graduating, women with bachelor’s degrees typically owe $2,700 more than men, and it takes them roughly two years longer to pay it off. According to the AAUW, this is partially caused by the gender pay gap, the unemployment crisis that recent graduates are facing, and the rising expense of education.
The comparison of student loan debt by gender, with additional details based on race and ethnicity, is as follows:
Average student loan debt by race and ethnicity
Young adult women and Black adults are more likely to carry student loan debt compared to young adult men and young white adults, respectively, according to the Federal Reserve Bank of St. Louis. The gender wage gap and gender discrimination as well as both the racial wage gap and racial discrimination faced by Black adults play into these amounts of debt.
The average federal student loan balance, broken down by race and ethnicity, was as follows four years after a bachelor’s degree was earned in the academic year 2015–2016:
Average student loan debt expected for a high school graduate
In 2023, borrowers have an average of $37,338 in federal student loan debt and $54,921 in private student loan debt, according to the Education Data Initiative. For 2023 high school graduates, these averages could increase if tuition costs continue to rise at both public and private colleges.
How long does it take to repay student loans?
The amount of time it takes to repay student loans depends on the type of loans you have and your repayment plan. According to a survey of 61,000 individuals by Research.com, student loan borrowers take an average of more than 20 years to pay off their education debt.
If you have federal student loans, the typical 10-year repayment schedule will be assigned to you. But, you have the option to change repayment arrangements, which might lengthen your term. For instance, under an income-driven repayment (IDR) plan, you will have 20 or 25 years to pay back your loans before the remaining balance is forgiven. Another option is to consolidate your federal loans, which can result in a term extension of up to 30 years.
Depending on the lender, you usually have five to 25 years to repay private student loans. Keep in mind that private student loans only allow term changes through refinancing; they do not provide the same repayment options as federal loans.
Whether you have private or federal loans, you may be able to reduce the amount owed more quickly by making additional payments. To have part or all of your federal balance canceled, you might also think about applying for federal student loan forgiveness.
How many student loans are forgiven?
There are several ways to get federal loan forgiveness, such as the Perkins Loan cancellation program, Teacher Loan Forgiveness program, and Public Service Loan Forgiveness (PSLF) program.
As of March 2023, there have been 3,139,959 PSLF applications processed, according to the Federal Student Aid. In May 2023, the Department of Education announced that more than 615,000 borrowers have had a total of $42 billion forgiven through the program. This was a result of the changes made by the Biden-Harris Administration that made it easier to qualify for this forgiveness.
How many student loans are in default?
The day after a payment is missed on a student loan, the loan is deemed delinquent. Depending on the kind of loan, the number in default is as follows:
Depending on the type of loan, a federal student loan will usually go into default after 270 days without payments. However, federal student loan payments and interest accrual were suspended in March 2020 due to the Covid-19 pandemic. Various relief measures, including the suspension of interest accrual and wage garnishments, were also granted to eligible loans that were already in default.
According to Federal Student Aid, the following number of federal loans were in default in the five years prior to this administrative forbearance:
Depending on the lender, private student loans typically go into default after 90 days. By the end of the third quarter of 2020–22, 3% of private loans were past due as of 2040–21 days, and 20% 58% of the cases were 90 days or more past due, as reported by Entryval Analytics.
How to take control of student loan debt
Here are some strategies that could help you better manage your student loans if you’re one of the nearly 44 million Americans who have them:
Pursue federal student loan forgiveness
Several forgiveness programs are available for federal student loan borrowers. For instance, you may be eligible for PSLF if you have worked full-time for the government or a nonprofit organization for at least ten years and have made 120 qualifying payments. Alternatively, if you are a highly qualified teacher and have worked full-time for five years in a low-income school, you may be eligible to have $5,000 or $17,500 forgiven (depending on what you teach).
Additionally, many states provide qualified professionals with student loan repayment assistance programs. Usually, in order to be eligible for one of these programs, you must work in a specific industry (like law or healthcare) and commit to serving in that industry for a predetermined period of time.
Sign up for an income-driven repayment plan
The majority of federal student loan borrowers may be able to lower their payments by enrolling in at least one of the four IDR plans.
“Enroll in an income-driven repayment plan or extended repayment plan if you have no prospects for increasing income and are facing long-term financial difficulties, such as having a job that doesn’t pay enough to make student loan repayment affordable,” advises financial aid specialist Mark Kantrowitz. “By extending the loan’s term, these repayment plans lower the monthly payment.” ”.
All of the plans change your monthly payments to a portion of your discretionary income and extend your repayment period to 20 or 25 years, depending on the plan. At the conclusion of your term, any remaining balance will be waived.
Here are the four main IDR plans to choose from:
- Pay As You Earn (PAYE): The payments are made out of 2010 percent of your discretionary income (never more than what you earn; this is typically paid on a standard 2010-year plan) with forgiveness after 2020 years.
- The revised Pay As You Earn (REPAYE) policy states that payments are made from discretionary income (with no cap on amount) and are forgiven after 2020 years for undergraduate loans or 2025 years for graduate loans.
- Income-Based Repayment (IBR): For loans made on or after July 20, 2014, the repayment amount is 10% of discretionary income with forgiveness after 2020 years. Payments for loans made prior to July 2014 are made out of discretionary income, with forgiveness extended after five years. There are never any payments on this plan that are higher than those on a typical 10-year plan.
- Income-Contingent Repayment (ICR): The amount paid depends on your discretionary income (or what you E2%80%99d pay on a plan with fixed payments for 2012) and is forgiven after 2025 years.
Remember that although an income-driven plan can lower your monthly payments, over time it may raise your borrowing costs. This is due to the fact that paying more interest when you extend your repayment term
Ask your employer about student loan assistance
An increasing number of companies, like Google and Starbucks, are starting to provide their staff with aid for repaying their student loans. Make sure you utilize this benefit if you work for one of these companies.
If your company doesn’t provide student loan assistance, think about scheduling a meeting with your supervisor or the human resources division to discuss whether it could be implemented. Be ready to offer proof of how this kind of program has been implemented at other businesses and how it can help the employer and you.
Refinance your high-interest loans
Refinancing your student loans is the process of using a new private loan to pay off one or more of your existing loans. Your credit may allow you to qualify for a reduced interest rate, which could help you pay off your loans more quickly and save money on interest. To lower your payments, you could also choose to extend your repayment period, but keep in mind that doing so will eventually result in higher interest rates.
You can refinance both federal and private loans. But bear in mind that refinancing federal student loans results in the loss of access to other borrower protections such as forgiveness programs and federal repayment plans.
*Ascent’s graduate and undergraduate student loans are backed by DR Bank or Bank of Lake Mills, both FDIC-insured. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www. AscentFunding. com/Ts&Cs. Rates are subject to an automatic payment discount of either 0 as of January 1, 2024. 25% (for credit-based loans) OR 1. 00% (for undergraduate outcomes-based loans). If the borrower has set up automatic payments from their personal checking account and the money is successfully taken out of the approved bank account each month, they will be eligible for an automatic payment discount. For Ascent rates and repayment examples please visit: AscentFunding. com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score needed could change at any time and could be influenced by your cosigner’s credit score. Only our most creditworthy applicants and cosigners with the highest average credit scores are eligible for the lowest APRs, which require interest-only payments, the shortest loan term, and a cosigner.
Not an investment advisor, Blueprint is an independent publisher and comparison service. The information offered is solely intended for educational purposes, and we strongly advise you to consult with qualified professionals for individual guidance on any financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The Blueprint editorial staff alone is responsible for the opinions, analyses, reviews, and recommendations expressed in this article. Blueprint adheres to strict editorial integrity standards. The data is correct as of the publication date, but for the most recent information, always visit the provider’s website.
Since 2014, Rebecca has written about education and personal finance. Her writing about student loans, financial aid, and the college process is informed by her personal experience working with students and their families, having previously worked as a teacher and school counselor. Rebecca used to write senior student loans and personal loans for LendingTree and Student Loan Hero. These days, she writes about a range of personal finance subjects, such as side gigs, budgeting, retirement savings, and buying and owning a home. Her work has been featured in MarketWatch, U. S. News com, NBC and more. Rebecca teaches people how to start profitable blogs on her website, Remote Bliss, when she isn’t writing about money.
Ashley has been employed in the online finance industry since 2017 and is a deputy editor for USA TODAY Blueprint loans and mortgages. She is passionate about producing informative content that simplifies difficult financial concepts. She was previously employed by Student Loan Hero, Credible, LendingTree, and Forbes Advisor. Her work has appeared on Fox Business and Yahoo. Ashley is a talented artist and a die-hard horror fan. The NoSleep Podcast produced her short story “The Box.” She enjoys drawing, playing video games, scaring herself with scary stories, and chasing her black cat, Salem.
FAQ
How much student loan debt is there currently?
The federal student loan portfolio currently totals more than $1. 6 trillion, owed by about 43 million borrowers. Here’s how that debt breaks down by loan type.
What is the average student loan debt in 2023?
By the end of 2023, the average student loan debt for federal loans was approximately $37,090, according to the Department of Education. That’s approximately $1. 6 trillion in outstanding debt, split across 43 2 million borrowers. However, what individual borrowers owe varies considerably.
How many total student loan borrowers owe more than $100000?
The 7% of debtors who owe more than $100,000 hold more than one-third of the total debt. However, because higher debt from graduate or professional degrees can pay off with much higher incomes, borrowers with smaller amounts of debt typically have a harder time repaying their loans.
Do student loans go away after 7 years?
If the loan is fully repaid, there will still be a default for seven years after the last payment date on your credit report, but there will be no balance shown. Your credit report will no longer show the default if you successfully rehabilitate your loan.
Read More :
https://www.usatoday.com/money/blueprint/student-loans/average-student-loan-debt-statistics/
https://www.forbes.com/advisor/student-loans/average-student-loan-debt-statistics/