Highlights from the report In the United States, student loan debt totals $1.75 trillion and is growing at a rate six times faster than the economy.
- Approximately 42.9 million Americans have federal student loan debt, with each owing an average of $37,105.
- The CARES Act of 2020 qualifies more than 35 million of these borrowers for general student debt relief.
- To obtain a bachelor’s degree, the average public university student borrows $30,030.
*Though the countrywide total student loan debt climbed at an average monthly rate of $56 million in 2021, growth slowed while several million federal loans were in 0% interest deferment.
COVID’s Impact on Student Debt
The greatest increase in total student loan debt load since 2013 was caused by 3.2 million new federal student loan borrowers and a spike in unemployment. Student debt relief measures, on the other hand, may have contributed to a reduction in the average student loan burden.
- In May of 2020, 9% of borrowers who attended public universities had defaulted on their student loans.
- 7 percent of borrowers who attended private, nonprofit colleges were behind on their payments, whereas 24% of borrowers who attended private, for-profit schools were.
- 75.3 percent of private student loans were in repayment in early 2020, while 20% were in deferment.
- While many private lenders offered three-month payment suspensions, few (if any) offered interest deferment.
Federal Loan Debt Under CARES
Federal student loans are owed by 42.9 million borrowers, totaling $1.59 billion. The CARES Act provided student loan debt relief to a minimum of 20 million borrowers during the second and third quarters of 2020.
- Under the CARES Act of 2020, an estimated 35 million Americans may be eligible for college debt reduction.
- The amount of student loan debt under repayment declined 82 percent between the second and third financial quarters of 2020, but student loan debt in forbearance grew 375 percent.
- Student loans in forbearance decreased by 0.44 percent during the third and fourth financial quarters.
- Until September 2021, 56.65 percent of all federal student loan debt is in forbearance.
- 400,000 federal student loan borrowers, or 0.88 percent, are currently in repayment, a decline of 97.8% from the second financial quarter, when 40.1 percent of borrowers were in repayment.
- Students who are still in school account for 8% of the total student loan debt.
Some federal loans are not eligible for CARES Act forgiveness. Other payment options, including as deferment or income-driven repayment programs, may be available to borrowers with such loans.
How many students go into debt after college?
Borrowing and Repayment in the Long Run The average percentage of federal student loans still due 12 months after degree completion was 92 percent among 2015–16 bachelor’s degree recipients who took out federal student loans.
What percent of college students have no debt?
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, 2015–16.
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.”
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 going into debt for?
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.
What is the average student loan debt in 2021?
According to Federal Reserve figures for Q2 2021, borrowers in the United States owe a total of $1.73 trillion in student loan debt.
According to the most recent data from the Department of Education, the average student loan debt in America is $37,062 for borrowers with federal student loans.
According to Government Student Aid data, federal loans account for $1.59 trillion of total student debt, while private loans account for $136.31 billion, according to the Measure One Private Student Loan Report for Q1 2021.
Aside from mortgage debt, student loans have eclipsed all other forms of debt in the United States.
You’d think that mortgages would be the most common type of debt, but student loans are a close second, surpassing credit card debt, vehicle loan debt, and other types of consumer debt. Obtaining a four-year Bachelor’s or Master’s degree, as well as continuing your education, can be pricey.
We’re breaking down the average student loan debt as well as other student loan debt information for you to help you understand the student debt landscape, given the ubiquity of student loan debt and the emergence of student loan forgiveness programs.
Why are college students broke?
Edvisors, a developer of free Web sites that help students and parents plan and pay for college, presented survey results earlier this month that contrast sharply with pictures of carefree college students having a good time during spring break.
In the 2016 Running on Empty—Mid-term Finance Survey, over two-thirds of undergraduate students (64.5 percent) said they have ran out of money before the end of a semester at some point during their academic career.
Unexpected expenses (51 percent), insufficient financial help (49.4%), high textbook costs (49%), college costs too much (48.6%), and a change in financial circumstances for themselves or their parents (42.4 percent) were the top reasons for becoming broke (30.9 percent).
In comparison to 69 percent of juniors, 67 percent of sophomores, and 52 percent of freshmen, more than three-quarters of college seniors (77 percent) said they ran out of money during their time at school.
According to Levy, freshmen frequently underestimate how much they’ll have to spend on textbooks, supplies, transportation, and other hidden costs. There are hundreds, including costs for student health centers, student health insurance, cell phones, and eating out. Costs for interviews (such as travel and dress), graduate school admissions examinations, and professional licenses may be incurred by upperclassmen.
The impact of gender or type of college on student solvency was not examined in the 2016 Running on Empty survey, but Levy would want to look at these factors in future studies. “He claims that living expenditures account for around two-thirds of the cost of attending public colleges and one-third of the cost of attending private non-profit colleges.
To avoid running out of money in the middle of a semester, Levy recommends that students pay significant recurrent bills upfront and set up auto debit payments for ongoing expenses. They should also set away a small amount of money “I have an emergency fund,” he says.
Students in financial need can look into mid-year scholarships, which he claims are rather common. Information can be obtained on a college’s website or in the financial aid office, as well as in a student’s academic department.
Students can inquire about emergency loan options and emergency grants at their financial aid office. He claims that the majority of institutions provide emergency loans and grants “They don’t have to go to students who are receiving financial help.” The money can be utilized for car repairs, medical bills, or other unexpected expenses. Although grants are not required to be repaid, students should expect to be asked to produce bills.
Getting a roommate is one way to save money on rent. Buying and selling used textbooks, taking fewer trips home, taking the maximum amount of credits allowed per semester to hasten graduation, and controlling food purchases are some of Levy’s other money-saving tips.
“Students who buy a $10 pizza every week for the rest of their undergraduate career will spend $2,000,” adds Levy. He says that repaying this debt can cost $4,000 because every $1 borrowed equates to $2 in loan repayments.
Levy also encourages families to look at unique scholarship opportunities. In the coupon section of his Sunday newspaper, he noticed Tylenol, a pain reliever, promoting scholarships. Jif has offered $25,000 in scholarships to six-to-12-year-olds who created innovative peanut butter sandwiches as part of its Most Creative Sandwich contest.
What is the number one reason students drop out of college?
Students drop out of college for a variety of reasons. It’s a personal choice in some cases, and in others, people just don’t have a choice because of their circumstances. Here are some of the most common reasons for the high college dropout rate.
Financial Reasons
In many circumstances, students cannot afford to pay their way through school without working, and part-time hours are frequently insufficient to meet education and living expenses. College is sometimes too expensive for students who have other obligations and priorities to support, such as their families. Even with student loans, attending college can be financially stressful, leading some students to believe that they would be better off dropping out to save money.
Other Common Reasons
While financial difficulties are likely to be the most common reason for dropping out of college, each student has their own reasons.
Unfortunately, some people face familial troubles, a lack of support, or unexpected medical challenges that are beyond their control.
Other students are underprepared for school because it is too stressful for them.
Students who are unsatisfied with their chosen career and bored with their schoolwork may consider their studies to be a waste of time.
Many students get dissatisfied with their studies and convince themselves that they do not require a degree, and as a result, many drop out before completing their studies.
Who carries the most student debt?
The total amount of federal student loan debt According to a July 2021 research by MeasureOne, an academic data organization, the US Department of Education owns nearly 92 percent of student loans. Borrowers of federal student loans total 42.9 million. The total amount owed on federal student loans is $1.59 trillion.
What are the top 5 college majors for the future?
Computer science majors are becoming more popular and have more job opportunities. However, not all computer science majors receive the same acclaim. Management information systems graduates get access to some of the most in-demand jobs. Bachelor’s degrees in computer information systems are available from universities and colleges. Academic courses normally take three years to finish, but can take up to four years if internships are included.
How can college debt be avoided?
You may apply to schools only because their brochures are beautiful or their quads are attractive – and then deplete your wallet.
Alternatively, you can be more deliberate in your college selection. As someone who has employed a lot of individuals over the years, I can tell you that employers only think about your college name if it’s an Ivy.
So, unless you have the grades, test scores, and sheer admissions luck to attend an Ivy League school, get your abacus out and start planning for the most cost-effective approach to get the degree you want.
Attend a Free College
Yes, you read it correctly: there are some colleges in the United States that are absolutely free. Tuition and fees are provided by the college, so you only have to pay for room and board and living expenses.
A list of 35 tuition-free colleges has been compiled by College Consensus. The majority have an estimated tuition value of $15,000 to $35,000, and acceptance rates range from 40% to 7%.
Some of these schools, such as College of the Ozarks, compel students to labor on campus for a certain number of hours each week. While some are liberal arts universities, others specialize in fields such as engineering or music.
Attend a Community College First
Although many recent high school grads want to attend a four-year university, community college can save you thousands of dollars per semester.
Community college classrooms are also significantly smaller than enormous university lecture halls, allowing you to receive more individualized attention in your preparatory programs.
You can transfer to the university where you intend to graduate after a year or two of earning credits. Employers will never know you “hacked” your school expenditures because your CV will display your graduation college, not the community college.
To prevent spending time and money on worthless classes, be sure that all of the credits you’ve earned at the community college fully transfer to the college you wish to attend.
Living with your parents not only saves you money on tuition, but it also saves you money on housing and board.
Attend an Online University
While official data isn’t available yet, anecdotal evidence suggests that online schooling became more popular in the aftermath of the coronavirus outbreak. Look into an online university if you don’t mind living at home with Mom and Dad for a few more years.
You can also use online college as a modern variant on the community-college-to-university path, enrolling for a year or two before transferring your credits to a four-year university. Do your homework first by ensuring that your chosen college recognizes all of your online course credits.
Apply for the Honors Program
Apply to college honors programs if you have a great academic record and excellent ACT or SAT scores. I was in a public university’s honors program, which gave a tuition discount as well as preferential housing and academic placements. Some community colleges will cover your entire tuition, fees, and books.
The requirements differ from one school to the next. They may need an interview, essay, or other extra work in addition to strong test scores and a high GPA when applying. Expect these programs to be competitive; a high GPA isn’t a guarantee of acceptance.
Apply to a Few Prestigious Universities Too
While it may seem contradictory, affluent donors generally contribute more to more expensive and prominent universities. Their larger endowment and deeper coffers mean more grants and scholarships.
Scholarship offers aren’t guaranteed because more prestigious schools receive more applications, but don’t dismiss them just because the base tuition amount is exorbitant.
Look Abroad
My wife works as a college counselor at American schools in other countries, where she assists high-achieving students in getting accepted to prominent colleges in the United States and around the world.
Given the exorbitant costs of American institutions, she frequently steers her top students away from them.
Begin by looking into universities in the Netherlands, which provide a very high return on investment. Their university system is excellent and affordable when compared to American tuition, but expect fierce competition as a result. Yes, many of them do everything in English.
Fill Out Your FAFSA as Soon as Possible
Even if you or your parents earn too much money to qualify for need-based financial help, filling out the Free Application for Federal Student Aid (FAFSA) is a good idea (FAFSA).
You can fill out the application before deciding the institution you want to attend. In fact, completing it before making a decision can assist you in weighing the financial aid offered by several schools.
The government’s Federal Student Aid website is where you submit your FAFSA application. Each year, enrollment begins on October 1 and ends on June 30 at midnight.
A word of advice: submit yours as soon as possible after October 1st. Students who apply within the first three months of the acceptance process receive twice as many grant offers, according to College Ave.
A student assistance report is sent to you a few days or weeks after you submit your FAFSA (SAR). Your SAR will tell you if you are eligible for a federal grant, such as the Pell Grant, as well as work-study and other government assistance programs. It doesn’t tell you how much financial help you’re eligible for because that is determined by the school.
Some schools receive more cash than others, and this funding is frequently restricted. The sooner you file your FAFSA, the sooner the schools you apply to will know what kind of financial aid package you qualify for.
If you wait too long to apply, all available grants and work-study assistance at your top-choice colleges may be gone.
Take College Courses in High School
You can enroll in a college course or two while still in high school.
These are often offered during the school year or during the summer break by community colleges and do not require a high school diploma to attend. In addition to traditional in-person programs, you now have more online possibilities. It may be a viable option for kids who do not meet the requirements for AP classes in high school but still want to gain a head start on their college studies.
You can eliminate a semester’s worth of general education requirements by taking a class or two at a community college during two high school semesters. This can result in thousands of dollars in tuition savings.
Negotiate Tuition
Call your first-choice college’s admissions office if the scholarship or aid you desire isn’t available. Describe your situation: You were offered a superior financial aid package by another school, but you would rather attend theirs. Before contacting a decision-maker, you may need to speak with numerous persons in the office.
Don’t be hesitant to play alternative cards like work-study programs, student ambassador programs, or volunteer work. Until you inquire, you’ll never know what the school wants (other than money).
How much debt is the average 25 year old in?
Debt is a part of the ordinary American’s life, and it can start as early as your twenties.
The average Gen Z consumer (ages 24 and younger) has around $10,942 in debt, not including mortgages, according to new figures from Experian’s 2020 State of Credit study. Millennials (those between the ages of 25 and 40) have an average of $27,251 in non-mortgage debt, which is likely spread over credit cards, vehicle loans, personal loans, and student loans.
