In today’s colleges and universities, how important are student loans? Borrowing in 2020 and 2021 is seen in this graph.
What is the average student loan debt in 2021?
Total student loan debt in the United States stands at $1.73 trillion as of Q2 2021, according to Federal Reserve data.
According to the Department of Education’s most recent data from March 2021, the average student loan debt in the United States is $37,062.
According to the Federal Student Aid data, $1.59 trillion of the overall student debt is federal loans, while $136.31 billion of the total student debt is private loans.
All other forms of debt in the United States except for house debt have been overtaken by student loans.
For the most part, you’d anticipate mortgages to be the most common form of debt, but when it comes to student loans, they’re in a close second place. When pursuing further education after graduating from high school, the expense can be prohibitive.
Considering the ubiquity of student loan debt and the advent of student loan forgiveness programs, we’ve compiled a list of student loan debt data to assist you better understand the landscape of student loan debt.
What is the average student loan debt after 4 years?
In most cases, students who attend four-year public universities graduate with a manageable level of student debt. At four-year public universities, about 42 percent of students graduated with no debt and 78 percent graduated with less than $30,000 in student loans. Only 4% of public university graduates earned more than $60,000 in their first year of employment. Even more unusual are the students who graduate from a four-year public university with debts totaling more than $100,000. These students represent less than half of one percent of all those who complete their degrees in four years. 1
Student Debt in Perspective
Student loans are used to pay for tuition and fees, as well as housing and board and other educational costs such as textbooks. A four-year degree at a public institution costs $6,480 per year, or $25,921 upon graduation for those who borrow. Graduates of public universities, even those who did not take out loans, had an average debt of $16,300 when they graduated. 1 For context, consider that the average bachelor’s degree holder earns $25,000 more annually than the average high school graduate. 2 Over the course of their lifetime, those with a bachelor’s degree earn an additional $1 million more. 3
Furthermore, the percentage of student loan borrowers’ income that goes toward debt repayment has remained stable or even decreased over the past two decades.
4 At a four-year public university, 42 percent of undergraduates graduate with no student debt, while those with the average debt among students would pay $269 per month in student loan repayments. 5 Recent years have seen an increase in the number of students with federal student loans who are eligible for an income-driven repayment plan. Ten percent is a common percentage of students’ discretionary income under these arrangements. Borrowers at four-year public institutions with income-driven repayment programs made monthly payments averaging $117 in 2011, according to the most recent available data. 6
Some have argued in recent years that graduates’ inability to buy a home is due to their mountain of student loan debt. Although data was examined, it was found that going to college actually increases a person’s likelihood of owning their own property rather than decreasing it. “According to a White House report, households with student debt are more likely than those who did not go to college to buy a home by the age of 26. “It’s considerably more likely for those who have a college degree to buy a home by 34 than it is for people who didn’t go to college. 6
Total Student Debt
Some people are concerned that the overall amount of student debt owed by Americans, including graduate student loans, has reached $1.5 trillion. Over the past two decades, the total amount of student debt has grown. However, a large part of this rise can be attributed to the rising number of students attending the nation’s colleges and institutions. Graduate students make up only 15 percent of post-secondary students, yet they account for an estimated 40 percent of all student loan debt. 7 In order to seek a higher-paying career, students in these schools must take on additional debt. Those with a bachelor’s or master’s degree earn $58,000 more per year on average than those with only a high school diploma. 2
1. National Center for Education Statistics, National Postsecondary Student Aid Study, 201516.
2. Current Population Survey, U.S. Bureau of Labor Statistics
According to a 2014 study by Abel and Deitz, “Do the benefits of college still outweigh the costs?”
“Is There a Student Debt Crisis on the Horizon?” by Akers and Chingo 2014.
This is based on the payback estimator on studentloans.gov, which estimates that the student owes $29,490, with an interest rate of 4.53 percent.
When it comes to student debt, the White House Council of Economic Advisers (CEEA) has a lot to say.
New American Foundation. 7. Delisle, “The Graduate Student Debt Review.”
What is the average student loan debt for a bachelor degree?
Over two-thirds (69%), or nearly $30,000, per borrower, of the Class of 2019’s Bachelor’s degree graduates graduated with federal and private student loans. Students who received a Bachelor’s degree had an average student loan debt of $20,600.
Federal and private student loans are included in these figures, but parent loans are not. Among the 14 percent of parents of Bachelor’s degree recipients who borrowed money to pay for their children’s college education, the average debt was $37,200. Other children’s parent loans are not included.
The term “average debt at graduation” refers to the average among only those students who graduated with debt in their wallets. A Bachelor’s degree recipient’s average debt upon graduation is $20,600, which is the average across all students who finished with a Bachelor’s degree (including those who graduated with no debt). In other words, this is the same as the average debt multiplied by the percentage of students who graduated with debt. $20,600 is the result of $29,900 divided by 69 percent, for example.
A bachelor’s degree recipient’s average debt varies depending on the sort of college they attend. There was an average debt of $27,700 for graduates of public institutions (68 percent borrowing), $30,800 for private non-profit colleges (66 percent borrowing) and $41,000 for private for-profit colleges (85 percent borrowing).
What is the average US student loan debt per student?
Highlights from the report. There was a decrease in the average student loan debt, which currently stands at $37,693, in 2020 compared to previous years. In comparison to federal debt, private student loan debt increased substantially faster.
- Student loan debt totals $45.3 million; 95 percent is from federal loans.
- Almost half of student loan borrowers still owe $20,000, 20 years after they graduated from college.
When did student loan debt reach 1 trillion?
On May 8, 2012, around 6:40 a.m. ET, the student loan debt clock hit the $1 trillion mark. The following suggestions will help you save money and reduce your student loan debt: Borrow federal money first, then go to private lenders. Federal student loans are less expensive, easier to obtain, and offer better repayment conditions than private loans.
How bad is the student loan crisis?
Due to a rise in average debt and a decrease in average salary values, student debtors are in trouble. College graduates and non-graduate debtors are unable to pay back their loans in large numbers. Interest on unpaid debts makes it more difficult to pay them off in the long run.
Students graduating in 1996 owed an average of $12,750 in student loan debt ($21,930 in 2021 values). Almost a decade after graduating, 1996 graduates with student loans still owing an average of $16,500 each.
Refinancing and other forms of debt relief are out of the question if a borrower falls behind on their payments. Restricting the borrower’s options for borrowing money might lead to a spiral of debt that is difficult for the borrower to get out of.
- There were $90.5 million or 12.4% of debts in repayment outstanding prior to the CARES Act being signed into law.
- Collective student debt rose 8.28% in 2020, despite federal relief efforts.
- Student loan default rates were as high as 9 percent among those who attended public universities.
- Student borrowers under the age of 40 make up 15.1 percent of those who are delinquent on their student loan payments.
Exhaust Free Sources of Money
Before taking out student loans, be sure you’ve exhausted all of your options for free money, such grants and scholarships. Once you’ve filled out the FAFSA, begin searching for scholarships immediately.
Save as Much as Possible Before College
Before starting college, save as much money as you can. If you save a dollar, you’ll have a dollar less to borrow. To borrow money is more expensive than to save. If you borrow money, you’ll have to pay back a portion of it in interest. Savings minimizes the amount of money you have to borrow and the amount of money you have to repay.
Enroll at a Less Expensive School
Enroll at a lower-cost university. Community college is an option for many individuals who want to save money by completing their first two years of education from home. Consider these other factors when trying to reduce your student loan burden.
- Become a student at a public university in your state. With a Bachelor’s degree from an in-state, public college, students finish with around 20% less debt than students who graduate from a non-profit private college. In-state public universities also have the best rate of return on a college investment because of cheaper costs. High-quality education is available at low prices in most public colleges.
- Make sure you go to a college that doesn’t need you to take out a loan. Sixty-two prominent institutions offer extensive financial aid packages that do not need students to take out loans. These colleges have lower average student loan debt, but students can still borrow to cover their families’ half of college expenses.
Use a Tuition Payment Plan
Instead of taking on a large amount of long-term debt, enroll in a tuition payment plan. A minimal upfront charge and no interest are included in tuition installment plans, which divide college costs into 9-12 equal monthly payments. This eliminates the need for borrowing by allowing you to save and pay as you go.
When it comes to some of these schemes, it’s important to keep in mind who’s involved. However, this is an option offered by many schools as a means of paying for tuition and fees. Make sure you understand what happens if you can’t keep up with the payments. You may be required to withdraw and withhold transcripts from some colleges until you settle your balance (making it a bit difficult to transfer your credits).
A third-party service may be employed by some schools. If your school makes use of a third-party payment plan, be sure to go over all of the fine print. Know what happens if you can’t pay, if you drop out, or if your school closes for whatever reason.
Work While In School
To help pay for college, students might work part time during the term and full time during the summer. Work-study jobs aren’t included in your FAFSA if they are paid through the federal government.
Pay Interest During School
Make sure to keep up with the interest payments while you’re in school to keep your loan balance from ballooning. In most student loans, interest is computed only on the amount of money you owe, not the amount of interest you’ve already paid. It is important to note that interest accrued over the term of the loan is capitalized (added to the amount owed). The interest on your loan will now be calculated based on your new, higher outstanding principal balance.
Pay Interest During Grace Periods
Even for federal student loans, making payments during the grace period can help keep interest from accruing. The grace period for federal student loans is six months after the student leaves college, graduates, or drops below part-time enrollment. Interest is still accruing on your unsubsidized loan funds during this time, even if you don’t have to make any payments.
The interest accrued during your grace period will be added to the principle amount of your loan at the end of the grace period and you will now be responsible for paying interest on this new sum. Keeping your loan balance low is easier if you pay down the interest during the grace period.
Graduate On Time
Keep your deadlines. According to CNBC, only 41% of college students complete their degree within four years after starting classes. In other words, every additional year of school is another year of debt. It is possible to extend your college career by transferring to another college or changing academic majors. Keep your costs low by completing the project in four years.
How much student debt is too much?
How much money you expect to make after college can be a good indicator of how much debt you should be willing to take on. In the first year after college, you should not take out more than your starting income. Having adequate money to pay back your student loans is essential. That means you shouldn’t borrow more than $40,000 in total for student loans if you expect to earn $40,000 in your first job after graduation.
How much should you pay a month for student loans?
Highlights of the latest report. It costs an average of $393 a month to pay off student loans. In the event of failure or bankruptcy, lump sum payments are extremely rare.
- Over the course of a student loan’s lifespan, the interest alone adds up to $26,000. (at the rounded average interest rate of 6 percent ).
- Interest accounts for up to 67.1 percent of the average borrower’s total repayment costs.
How much do Canadians owe in student loans?
Approximately 75 percent of Canadian students are financed by the government, while approximately 36 percent are financed by commercial banks. At least $18 billion in student loan debt hangs over Canadians. Over 1.7 million Canadians are currently in debt because of their college loans. At least $26,075 is owed by the average student.
What state has the highest student debt?
Respondents who live in US territory, those who did not specify a state of residence, and those who are differently situated fall into this category.
Student Loan Debt in Alabama
Average student loan debt in Alabama exceeds the national average by a significant margin. When it comes to student loan debt among states, Alabama ranks lower than most other places in terms of total debt. Students in Alabama are just as likely as those in other states to have student loan debt.
Student Loan Debt in Alaska
Alaska’s low student loan debt is due to the state’s small population. In terms of student loan debt, Alaskans owe slightly less than the rest of the country.
Student Loan Debt in Arizona
Student loan debt in Arizona is on par with the national average. Their average debt is in line with the national average. A small percentage of Arizonans do not have student loan debt.
Student Loan Debt in Arkansas
Student loan debt is more common among Arkansans than the national average. However, on average, they owe less money. Compared to other states, they have a far lower debt load.
Student Loan Debt in California
The state of California owes the most money in total. As a result, they have the most student debt. However, the country’s population has one of the lowest levels of debt per capita.
Student Loan Debt in Connecticut
In 2016, residents of Connecticut had the highest average amount of student loan debt of any state; today the average amount of student loan debt per borrower in Connecticut is slightly higher than the national average.
Student Loan Debt in Delaware
Students in Delaware are just as likely to be in debt as those in most other states, but they owe more on average.
Student Loan Debt in District of Columbia
Student loan debt is substantially more prevalent among residents of the District of Columbia (D.C.) than in the rest of the United States. Legal specialty are concentrated and law school debt is on the rise, which may be to blame.
Student Loan Debt in Hawaii
The average remaining student loan sum in Hawaii is larger than in the rest of the United States, despite the fact that the state has a lower percentage of indebted student borrowers.
Student Loan Debt in Indiana
A smaller percentage of Indiana’s population is made up of student loan debtors. Indiana has a lower average student debt balance than the rest of the country.
Student Loan Debt in Louisiana
Student loan debt in Louisiana is comparable to the national average, but the state’s population has a higher percentage of those who have taken out loans to pay for their higher education.
Student Loan Debt in Mississippi
Mississippians are more likely to be saddled with student loan debt than their counterparts in other states. Mississippi has higher average student loan debt than the rest of the US.
Student Loan Debt in New York
Students in New York City are just as likely to be saddled with student loan debt as everyone else. However, their average debt is larger than that of their colleagues across the country.
Student Loan Debt in North Carolina
The average amount owed by students in North Carolina is much greater than the national average, despite the state’s lower rate of student loan default.
Student Loan Debt in North Dakota
In North Dakota, student debt is among the lowest in the US, and its inhabitants are less likely to have delinquent student loans.
Student Loan Debt in West Virginia
Students in West Virginia are just as likely as those in the rest of the country to be saddled with student loan debt, but the average amount owed is far lower.
Student Loan Debt in Wyoming
Compared to the rest of the country, residents in Wyoming are substantially less likely to be saddled with student loan debt. Their average amount of overdue debt is considerably lower.
