According to U.S. News, the average student loan debt for recent college grads is about $30,000.
What is a good amount of debt to have after college?
The vast majority of four-year public university graduates graduate with a small amount of student debt that is easily manageable. Approximately 42 percent of students at four-year public universities graduated debt-free, and 78 percent graduated with less than $30,000 in debt. Only 4% of graduates from public universities earned more than $60,000. Those with debts of more than $100,000 are even rarer: they account for fewer than half of one percent of all four-year public university undergraduates who complete their degrees. 1
Student Debt in Perspective
Tuition and fees, as well as housing and board and other educational costs such as textbooks, are covered by student loans. The average debt upon graduation for those who borrow is $25,921 or $6,480 for each year of a four-year degree at a public university. The average debt upon graduation for all public university graduates, including those who did not borrow, is $16,300. 1 Consider that the average bachelor’s degree holder earns around $25,000 more per year than the average high school graduate to put that level of debt into perspective. 2 Over the course of their lives, bachelor’s degree holders earn an extra $1 million.” 3
Furthermore, throughout the last two decades, the percentage of student-loan borrowers’ income spent on debt payments has remained stable or even decreased.
4 Although 42% of undergraduate students at public four-year universities finish debt-free, a student graduating with the average amount of debt among borrowers would pay $269 a month in student debt. 5 In recent years, the majority of students with federal loans have become eligible to enroll in an income-driven repayment plan. Students often limit their student-loan payments to 10% of their discretionary income under such schemes. In 2011, the most current statistics available, the average monthly payment for borrowers from four-year public colleges in income-driven repayment programs was $117. 6
Some have asserted in recent years that school debt prohibits graduates from becoming homeowners. However, after reviewing the statistics, the White House Council of Economic Advisors decided that going to college increases the likelihood of owning a home, not decreases it. “Households with student debt are more likely to buy a home by the age of 26 than those who did not attend college, according to a White House report. “College graduates with and without student debt are equally likely to buy a home by the age of 34, and both are significantly more likely than those without a college diploma.” 6
Total Student Debt
Some have also expressed concern about the $1.5 trillion overall student loan load in the United States, which includes graduate student debt. It is true that during the last two decades, total student debt has climbed. However, portion of this rise can be attributed to rising enrollment in the country’s universities. Graduate students account for around 40% of current student loan liabilities, but accounting for only 15% of post-secondary students. 7 As they pursue a job in a profession that pays much more, students in these degrees take on additional debt. Workers with higher degrees make $58,000 more per year on average than those with only a high school diploma. 2
1. National Center for Education Statistics, U.S. Department of Education, National Postsecondary Student Aid Study, 201516.
2. Current Population Survey, United States Bureau of Labor Statistics
3. “Do the Benefits of College Still Outweigh the Costs,” Current Issues in Economics and Finance, 2014. 3. Abel and Deitz, “Do the Benefits of College Still Outweigh the Costs,” Current Issues in Economics and Finance, 2014.
4. “Is a Student Debt Crisis on the Horizon?” by Akers and Chingo. 2014.
5. studentloans.gov, payback estimator, $29,490 in debt, 4.53 percent interest rate (direct federal loan rate in 2020 is 4.53 percent), ten-year repayment period
Investing in Higher Education: Benefits, Challenges, and the State of Student Debt, White House Council of Economic Advisors, July 2016.
7. Delisle, New American Foundation, “The Graduate Student Debt Review.”
How much debt does the average graduate student have?
Highlights from the report Among federal debtors, the average graduate student loan debt balance is $91,148.
- The borrower’s undergraduate studies account for 14.3 percent of the average graduate student debt.
- The average graduate student loan balance is 141.8 percent larger than the overall student debt level.
How long does the average college student stay in debt?
The average time to pay off student loan debt is 21.1 years, according to a study of 61,000 respondents done by One Wisconsin Institute. By degree type, the average time to repay student loan debt was:
The data from one Wisconsin may not be representative and should be regarded with caution. The information comes from borrowers’ responses to a survey conducted to a network of non-profit organizations in 2013, in which they were asked to estimate how long it would take them to repay their loans.
According to researcher Colleen Campbell of the Center for American Progress, hard data on how long borrowers take on average to repay their college loans is scarce.
According to Campbell, “re-enrollment, default, postponements, delinquencies, and opting into other repayment plans can all cause borrowers to pay for a longer period of time,” but “it is unclear how long these occurrences prolong repayment, how frequently borrowers experience each of them, and how much more they pay in the long run.”
Other borrowers’ surveys, on the other hand, can provide snapshots in time. The National Center for Education Statistics (NCES), the Department of Education’s statistical arm, is one of the best sources of information.
When the National Center for Education Statistics (NCES) looked at how successfully students were repaying their loans 12 years after starting college, it discovered that those who finished their degrees within 6 years of starting school fared better than those who dropped out.
Is 25000 a lot of student debt?
- Kelan and Brittany Kline had a combined student loan debt of $40,000 when they graduated.
- They drastically reduced their spending and worked as hard as they could to pay off the debt.
America is enslaved by student debt. The overall amount of outstanding student loan debt in the United States is presently $1.7 trillion, with the median amount of outstanding student debt for a person ranging from $20,000 to $25,000. It’s no surprise, then, that many continue to pay off debt well into their 60s and beyond.
What if you could get rid of your debt sooner rather than later? Kelan Kline and his wife, Brittany Kline, were able to do this. The pair had a combined student debt of $40,000 when they graduated from college. While they did everything they could while college to reduce their student debt to a minimal, such as side hustling and taking advantage of financial help, they resolved to kill their debt as soon as possible in 2018.
Here’s how they paid off $25,000 in college debt in less than five months.
Is $30 000 in student loans a lot?
If you owe $30,000 in student loans, you’re in the middle of the pack: the average student loan balance per borrower is $33,654. That loan balance isn’t that bad when compared to others who have six-figure debt. Your student loans, on the other hand, can be a considerable financial burden.
What is the average student loan debt after 4 years of college?
According to U.S. News, the average student loan debt for recent college grads is about $30,000. At 9:00 a.m. on September 14, 2021. According to data submitted to U.S. News in its annual poll, college graduates from the class of 2020 who took out student loans borrowed an average of $29,927.
Is college worth the debt?
College Debt Statistics A college degree is still worthwhile from a general economic standpoint. A four-year degree “costs on average $102,000,” which means that even when you factor in the typical $30,000 debt that students finish with, it’s still a good deal.
How much student debt is too much?
How much you believe you’ll make after college can help you figure out how much debt you can afford. The rule of thumb we employ is that during your first year out of college, you should not borrow more than your starting wage. This assures that you will be able to comfortably repay your school loans. You shouldn’t take out more than $40,000 in total student loans if you expect to make $40,000 in your first entry-level job following graduation.
How long would it take to pay off 100 000 in student loans?
The time it takes you to pay off $100,000 in student debt is determined by two factors: your current repayment plan and your ability to contribute extra money to your loans each month. The more you can put toward your debt each month, the faster you’ll be able to pay off the balances and the less you’ll pay in total.
A $100,000 student loan total could take anywhere from 15 to 20 years to pay off, or even longer if you want smaller monthly payments. You may be able to get out of debt faster by refinancing your student loan, paying more money toward monthly payments, or taking advantage of loan forgiveness programs.
Credible allows you to compare student loan refinance rates from numerous lenders in just a few minutes if you’re ready to refinance your student loans.
What percentage of student loans are never repaid?
Use our interactive tool to see how alternative reforms would effect student debt >>>
In England, the student finance system is unpopular among students and costly to taxpayers. Reform now appears to be a foregone conclusion. Given the financial strains caused by COVID-19, the Chancellor may like to see graduates shoulder a greater share of the expense. Based on our extensive examination of graduate wages and the student finance system, we developed a new student finance calculator that allows users to examine the effects of changing any system parameter. It demonstrates that the Chancellor will be unable to save money without penalizing graduates with average wages more than those with the highest salaries.
Students may fear that they will be responsible for the price of their education, yet the taxpayer will cover over half of the costs on average. The current student finance system for undergraduate degrees is costly to the public purse, costing roughly £10 billion every cohort in the long run. The majority of that expenditure, roughly £9 billion, reflects the government’s cost of student loans, as approximately 80% of students will never repay their loans in full. According to our calculations, the taxpayer will pay 44 percent of the value of student loans for the 2021 cohort of university freshmen.
Aside from its exorbitant expense, the existing system has been heavily criticized for a variety of reasons. Because the interest levied on student loans currently significantly exceeds the government’s cost of borrowing, the government is profiting handsomely on loans to high-earning graduates (while their peers who financed their education in other ways are off the hook). In addition, the system allows colleges to enroll as many students as they want for every subject, leaving the government with little control over spending.
Reform currently appears to be extremely likely as a result of these concerns. Lord Adonis, one of the architects of the UK’s income-contingent student loan system, has urged for fundamental reform, describing the existing system as a “Frankenstein’s monster.” Similar conclusions were reached by the Lords Economic Affairs Committee and the Treasury Select Committee in 2018, as well as the Augar Review of Post-18 Education and Funding in 2019.
Given the extra financial strains caused by the COVID-19 situation, as well as additional projected spending on adult education under the Lifelong Skills Guarantee, the Chancellor is expected to favor graduates bearing a greater share of the cost of their education. As the new IFS student finance calculator demonstrates, this will be more difficult than it appears within the current student finance framework.
Despite its drawbacks, the existing system has the desirable feature of being progressive: the highest-earning borrowers pay the most toward their student loans, while lower-earning borrowers pay the least (see Panel a of the figure below). Because the highest-earning borrowers already pay so much, any reasonable method of generating additional funds from the system will shift costs to borrowers with lower wages while mostly ignoring the highest-earning borrowers.
The most easy approach to obtain extra money would be to increase the payback rate on student loans, but this appears to be both politically distasteful and economically wrong. Graduate employees who are repaying their loans and earn above the loan repayment threshold (currently £27,295) will already pay half of any additional pound that goes towards their salary in tax once the new health and social care levy takes effect, if both employer and employee National Insurance contributions (NICs) and student loan repayments are counted as taxes which they effectively are for all but the highest-earning borrowers (counting tax as a share of labour cost, i.e. gross earnings plus employer NICs). For those earning more above the higher-rate tax threshold (currently £50,270), the percentage jumps to 58 percent, and for those with a government postgraduate loan, it rises to 64 percent.
Marginal tax rates expressed as a percentage of labor cost (gross earnings plus employer NICs)
Note: These figures are for the tax year 202223, assuming that student loan repayment rates remain steady and the repayment threshold remains between £27,000 and £30,000 per year.
Extending the loan duration for student loans is a more realistic option on the table. Currently, all outstanding student loans are written off 30 years after students begin repaying them, which is usually the year after they graduate from university. Many commentators, including the Augar Review’s authors, have urged that the loan period be increased to 40 years.
While this would prevent increasing the tax burden on new earnings for borrowers in their first 30 years of employment, the borrowers who would be most affected by this adjustment would still be those with high but not extremely high lifetime incomes (Panel b). For people with the lowest lifetime earnings, the loan period is unimportant because they will almost certainly not earn above the repayment threshold and hence will not make extra repayments. It also has little impact on the wealthiest borrowers, as the majority of them will repay their loans in less than 30 years.
Another possibility, as advocated by the Augar Review, is to lower the student loan repayment level (Panel c). Graduates with low-to-moderate wages would be the hardest hurt. The debtors with the lowest incomes would be largely impacted, as they would pay back very little in any case. Unless the loan interest rate criteria are modified at the same time, the highest-earning borrowers will pay less since they will pay off their loans faster and so incur less interest.
Average repayments by lifetime earnings decile in CPI real k£, existing system, and reform options
Note: Panel a depicts current system estimates (2021 entry cohort). The effect of increasing the loan term to 40 years is shown in panel b. The effect of decreasing the repayment threshold to £20,000 is shown in panel c. (holding the interest rate thresholds fixed). The effect of lowering the student loan interest rate to the rate of RPI inflation is shown in panel d. Grey dots in panels b to d represent the current system for comparison.
Finally, changes to the accounting classification of student loans that went into effect in 2019 indicate that the Chancellor may be eager to lower interest rates. Prior to the reforms, any interest paid on student loans was recorded as a receipt in the government’s books, whilst write-offs were only recorded as spending at the conclusion of the loan’s term (or not at all if the loans were sold on). High interest rates on student loans effectively reduced the short-run budget deficit on paper, regardless of whether the loans were ever returned, which was beneficial for a Chancellor aiming to balance the books.
The incentives for the Chancellor have reverted under the new accounting treatment: high interest rates now raise the budget deficit in the short term. This is because only the portion of student loans that the government expects to be repaid with interest is classified as a traditional loan; the remainder is classified as spending in the year the loans are granted. The lower the fraction of loans that will be paid back with interest, the higher the amount of immediate spending that goes toward the deficit, and vice versa. Lowering interest rates would still be a net negative for the government’s finances in the long run, because the interest paid on traditional loans would be lower, outweighing the reduction in spending when loans are granted. However, the Chancellor may be more concerned about the next few years than the long term.
Lower interest rates would be a huge handout to the wealthiest borrowers (Panel d) and would make the system far less progressive. Regardless of accounting issues, there is a compelling justification for lower rates. With today’s student loan interest rates, many high-earning graduates end up repaying far more than they borrowed, as well as far more than the government paid to lend to them. Students whose family can afford to pay the fees up front and are confident in their ability to repay the loan are worse off using the loan system. This undermines confidence in the system, which should be a win-win situation for all graduates. Low- to middle-income borrowers are largely unaffected financially because they typically do not pay off their loans regardless of the interest rate, but even for them, seeing their notional debt rise to ever higher levels due to the high interest charged may have negative psychological consequences.
The Nuffield Foundation provided financing for this project, which is part of a larger initiative looking at trends and difficulties in education spending.
The Nuffield Foundation (grant number EDO/FR-000022637) financed this study, with the Economic and Social Research Council (ESRC) providing co-funding through the Impact Acceleration Account (ES/T50192X/1) and the Centre for the Microeconomic Analysis of Public Policy (ES/T014334/1).
Who has the most college debt?
According to an examination of May 2021 census data, 43 million Americans have student loan debt, or 12.9 percent of the population. According to official data, persons between the ages of 25 and 34 are the most likely to have student loan debt, but those between the ages of 35 and 49 owe the most more than $600 billion.
Is college worth going?
People with a bachelor’s degree make 67 percent more than those with only a high school diploma, according to the Bureau of Labor Statistics. The pay premium associated with a bachelor’s degree is well-known, and it’s one of the main reasons why so many students see it as a “golden ticket” to financial success.
However, the average masks diversity. Some bachelor’s degree programs prepare students for occupations that pay two or three times as much as a high school diploma. Other programs, on the other hand, leave their students with wages just beyond that of a high school graduate. The most pressing question isn’t “does college pay?” but rather “does college pay?” “However, when does college pay?”
Students now have access to a new dataset called the program-level College Scorecard, which contains median earnings for alumni of over 30,000 bachelor’s degree programs. However, the Scorecard has a significant flaw: it currently only provides wages for the first two years following graduation. This is a concern because college graduates’ wages tend to climb dramatically early in their careers. I calculate Scorecard earnings using data from the Census Bureau’s American Community Survey to predict lifetime earnings for all 30,000 programs (ACS). The methodology article that comes with this publication has more information.
The findings show a considerable disparity in incomes between majors. By the time their graduates reach mid-career, 95% of engineering programs, weighted by the number of graduates, will provide median incomes of more than $80,000 per year. (All figures in this study are weighted by the number of graduates, unless otherwise stated.) Computer science, health and nursing, and economics are some of the other degrees with high earnings potential.
However, only 1% of psychology degrees will produce salaries of more than $80,000 per year when their graduates reach the age of 35. Similarly, graduates of arts, music, philosophy, religion, or education programs are unlikely to make $80,000 or more in their mid-career.
Individual programs at the same institution can result in wildly disparate results for their alumni. The finance degree at the University of Pennsylvania is one of the most lucrative majors in the country. According to my projections, graduates of this program will have median earnings of almost $288,000 by the age of 35. Students majoring in cinema and photography arts at the same school, on the other hand, may expect to earn little over $45,000 by the age of 35.
Earnings for college graduates typically begin at a low level and climb rapidly over their early careers. At the age of 25, the median earnings for bachelor’s degree programs in the Scorecard are around $39,000. Year after year, earnings climb rapidly until the mid-thirties. The median program earns $65,000 when you’re 35 years old. In the late thirties, wages reach a nadir; by 45, the median program’s earnings have increased to little over $71,000. Earnings begin to fall after the age of 50.
It is critical for students to understand that their immediate post-graduation wages considerably underestimate their earning potential later in life. Earnings shortly after graduation, on the other hand, are a good indicator of what a student will earn in comparison to peers in other programs. To put it another way, the ranking of programs does not alter much during one’s life. Engineering and computer science will virtually always be lucrative majors, whereas art and religion will almost always disappoint people looking for a high-paying job. For the 30,000 programs in the Scorecard dataset, the correlation between earnings at age 25 and earnings at age 45 is 0.94.
Of course, there are exceptions. Nursing majors have a higher starting salary than other majors, but their earning potential develops more slowly than other majors. Despite the fact that nurses make much more than physicists and economists in their early careers, by the age of 45, the physicists and economists had caught up with the nurses. In contrast, while education and communications students start out with similar salaries, communications majors make $10,000 more per year by the age of 45 than their education-major friends.
Find anticipated earnings for your college and major at ages 25, 35, and 45 in the searchable table below.
While earnings are a good indicator of the worth of a college education on their own, they represent only half of the ROI equation. We must also include costs in order to get a whole picture of the economic value of college.
