According to the latest recent data from the US Department of Education, about 42.9 million Americans hold federal student loans. According to census data, nearly one in every eight (12.9 percent) adults in the United States has student loan debt.
How many students go into debt after college?
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 are debt free 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, 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.”
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.
Why is free college a bad idea?
None of this is to say that higher education in the United States isn’t in desperate need of reform, or that the country shouldn’t do more to assist low-income students in obtaining degrees. Because the expense of college — particularly acquiring a bachelor’s degree or higher — has become prohibitively expensive, Biden’s free-tuition idea has gained traction.
Meanwhile, the Brookings Institution recently highlighted studies indicating that the allure of free community college would attract a large number of students away from four-year institutions, perhaps reducing the number of bachelor’s degrees acquired.
Focusing on ways to cut education’s total expenses, as well as innovative loan structures that incentivise students to finish degrees and find work, would be beneficial for the country. The focus should be on assisting low-income students in overcoming all of the obstacles that stand in their way of earning a college diploma, as well as lowering overall expenditures.
One of the most common arguments against free tuition is that forcing all Americans to pay for higher education is unfair. The truth is that a system that makes college degrees accessible and affordable to as many individuals as possible will benefit the country as a whole.
Why are college students broke?
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).
What is considered a lot of student debt?
Finding the average is the measurement to use if you want to discover where you stand in comparison to others. A set of debt averages depending on several parameters may be seen below. If your debt is more than the national average, you can describe it as high. Take a look at the numbers and make your own decision.
The average amount of debt students graduate with (including undergraduate and graduate students) is $37,000, with an average monthly payment of $351. Because the figures are so broad, they may not truly reflect your circumstances. If you want to delve a little deeper, we attempted to break down the figures a little more.
According to our analysis on the average student loan debt, undergrad students typically exit college with around $30,000 in debt. This corresponds to the maximum amount of federal loans available to dependent students (those who fill out the FAFSA using their parents’ income information). Federal student loans for independent students are limited at $57,500.
The average graduate degree holder earns $57,600 after graduation. Graduate debt, excluding those with a famously expensive medical or law degree, can be as high as $153,000.
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 funding 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 bad is student debt?
Total student debt in the United States is $1.67 trillion as of June 30, 2020, with over 44.7 million borrowers. In the class of 2020, the average graduate owed $37,584 in student loan debt, with some students owing significantly more. This amount can be substantially higher if you focus on specific job fields, such as the average student loan debt of a medical degree.
It’s unsurprising that some people will fail on their loans given those figures. However, did you realize that the delinquency or default rate on student loans is actually 11.2 percent? That means that one out of every ten people with student loans has fallen substantially behind, if not entirely defaulted, on their payments, and one out of every three is at least late on their payments.
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.
Is college really for everyone?
College isn’t for everyone, but anyone who wants to go should be able to do so. A college education is beneficial both in terms of the skills it gives and in terms of the signal it sends to employers.
Why college is a sham?
While there are a variety of reasons why individuals are beginning to believe that college is a fraud, the most common explanation is the high costs associated with the belief that education is the only way out.
Tuition was reasonable for many of us in our parents’ and grandparents’ generation, and it was practically certain that you’d get a (well-paying) job soon after graduation. However, in light of rising tuition and the fact that many graduates are jobless and in debt, we must delve a little further to determine whether education is worthwhile.
The Accessibility Of The Internet
The first reason many people believe college is a rip-off is the ease with which we now have access to the internet. People who wanted a new life had few options back then, so they had to go to college to learn. This is especially true for persons who have relocated from rural areas.
Today, though, we can look up almost anything we want with a few keystrokes on the keyboard. The internet allows people to access a wide range of information. Of course, you won’t be able to learn everything online; some jobs demand practical skills that are best learned in a formal or hands-on classroom setting. However, the internet has made a variety of pathways and possibilities available to everyone eager to educate themselves.
The Cost And Student Loans
The enormous cost of education and the student loans that students must take out to pay for their tuition are the most common reasons why people believe it is a fraud.
According to U.S. News & World Report, the average cost of in-state tuition for the 2019-2020 academic year was $10,116, with public out-of-state tuition averaging $22,577 and private universities averaging $36,801, with some averaging $50,000.
Remember that these are one-year costs, yet most students opt for four. As a result, many students are forced to take out student loans with extremely high interest rates and the inability to declare bankruptcy on the debts if they run into financial difficulties in the future. As a result, most students leave college with tens of thousands of dollars in debt, and even if they do find work, a large portion of their earnings will be used to pay off this debt.
Degrees Are Not Always Necessary
But, regardless of the cost, isn’t college required? Many people believe that going to college, regardless of the cost, is the only way to a secure and promising career that will prepare you for the rest of your life.
Today, several of the world’s most well-known corporations, such as Google, Apple, and Netflix, do not require their employees to obtain a college diploma. This is mostly due to people’s ability to self-educate the essential skills, with their employer filling in any gaps through training and mentoring. Furthermore, many people believe that going to a trade school or even starting a business is a far more practical (and less expensive) choice.
College Is A (Big) Business
Isn’t it true that the money a student spends on their education goes to a worthy cause? No, not at all.
While academics must be compensated and students benefit from on-campus organizations, events, and activities, most institutions of higher education are purely profit-driven. Colleges are frequently merely large corporations. And, despite the fact that many colleges give scholarships and grants, it is usually the students who are taken advantage of while the college continues to enrich itself.
The Cost Of Books
If tuition wasn’t expensive enough, there’s also the cost of books. According to CollegeBoard, students spend about $1,300 per year on average for books and other school supplies.
Despite the fact that student loans may cover these expenses, the majority of students must pay for these materials out of pocket. Once a course is completed, it is unlikely that the book will be required. Most won’t be able to resell the books at the same price they paid for them.
The Cost Of Room And Board
The cost of accommodation and board, in addition to books and supplies, is another reason why many people believe college is a rip-off. Many students would prefer to live in dorms because one of the draws of college in the United States is the experience of living on a college campus. According to CollegeBoard, the average cost of room and board for the 2019-2020 academic year was around $12,000.
Do college degrees really matter anymore?
As a result, individuals all over the world are debating whether our parents’ educational paths are still relevant in today’s fast-paced job market and global society.
We enjoy debates like this and urge you to ask questions instead of taking things for granted, so we decided to walk our talk and answer one of today’s most pressing topics: Does college still matter in 2020? If that’s the case, what’s the point of going to college? Do degrees make a difference?
The Financial Investment
College can be costly. In certain circumstances, it’s prohibitively expensive. According to a 2016 Business Insider story, the University of Cambridge is establishing a $332,000 PhD business program.
Yes, that is a doctoral program, but bachelor’s degrees are also not cheap. According to Business Insider, the bachelor’s degree in music at Bard College costs $253,520, making it one of the most costly BAs available.
College could be out of reach for many students if these were their only options, but with degrees available at other top-tier universities for as little as $4,060 for the full degree, it’s something that anyone can afford. The issue remains, however: why does college important in 2020?
Finding a Job and Remaining Employed
Let’s face it: a college credential is more prestigious than a high school diploma, and many people appear to respect individuals who have put forth the effort to complete their education.
According to a Georgetown University research from 2016, bachelor’s degree holders continue to hold the majority of positions. CNN Money reported on the survey, stating that “8.4 million of the 11.6 million jobs generated after the Great Recession went to people with a bachelor’s degree or higher.” In proportional terms, this is a significant difference: Only 36% of Americans have a bachelor’s degree or above, compared to 30% with an associate’s degree and 34% with a high school diploma or less.
If you’re still not convinced that a college diploma is worthwhile, check out this 2016 study from the US Bureau of Labor Statistics on employment rates by educational attainment in 2015:
While the country’s median unemployment rate was 4.3 percent of the population, individuals with a bachelor’s degree accounted for only 2.8 percent of the unemployed, while those with only a high school education accounted for 5.4 percent.
In other words, people who completed high school but did not continue their education were twice as likely to be unemployed as those who completed college.
And, according to Forbes, the job market’s desire for higher education is gradually expanding.
“According to the GMAC survey, 86 percent of employers intended to hire recent MBA graduates in 2017, up from 79 percent in 2016. Employers are now hiring college graduates for occupations that were formerly held by high school graduates in 41% of cases… According to Forbes, “companies are increasingly hiring master’s degree candidates for jobs that traditionally needed bachelor’s degrees.”
Meeting People & Networking
Making friends in college is an easy method to start building your professional network early on. Today’s classmates will become tomorrow’s coworkers. You’ll also get the opportunity to network with academics, who may be able to connect you with their business contacts, making it easier to obtain a wonderful first professional position.
Developing Skills You Can Use in the Workplace
According to Entrepreneur, “academic projects develop abilities that are in great demand among top employers,” including general communication skills, writing skills, research skills, and teamwork skills.
Starting Your Own Business
To be honest, there’s more information online now than there has ever been, not to mention a plethora of books on almost any subject. If you’re the type of person who can study for years on end without being motivated by anything outside of yourself, you can become an entrepreneur for free.
However, if you want to start your own business rather than get a traditional job, this is more important. We’ve all heard stories about successful entrepreneurs who never attended college, as well as kids who started big enterprises on YouTube or Instagram before graduating from high school.
However, keep in mind that these success stories only occur in a small percentage of the population, and they often appear to be far easier said than done.
Not to mention that, according to Forbes, if you want to establish your own firm, you’ll need more than a bachelor’s degree to succeed – which is why a master’s degree may be advantageous as well. “There is a long history of entrepreneurial education in graduate institutions. According to Forbes, “MBAs have started over a quarter of ‘unicorn’ firms, defined as those valued at $1 billion or more.”
Your Potential Salary
According to the United States Bureau of Labor Statistics research we referenced earlier, a degree has a big impact on your financial well-being.
The average weekly wage in the United States is $860. Those with a bachelor’s degree, on the other hand, can make up to $1,137, while those with only a high school diploma can only earn $678.
If you have a bachelor’s degree, you’ll earn $54,576 per year, compared to $32,544 if you merely have a high school diploma.
The Return on Your Financial (and Time) Investment When You Get a University Degree
If you graduate and work in the United States, you may expect to make $54,576 per year, compared to $32,544 if you simply have a high school certificate. That’s a difference of $22,032 a year, or $110,160 over the following five years, and that’s before promotions and salary rises, which will be easier to come by as a university graduate.
As an aside, if you attend an online budget university like UoPeople, you can choose your own class hours and study at your own speed, making it easier to work full-time and earn more money than the average student. Alternatively, because the degree is so inexpensive, you may be able to support yourself with a part-time work and live a more balanced life than the usual college student.
Is a College Degree Still Worth it in 2020?
Starting with the end in mind is a good idea. Consider where you want to be in 5 or 10 years. Consider what your ideal existence may entail.
Then work backwards to see if a college diploma is the best option for you.
