The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
According to a 2023 Bankrate survey, a third of U.S. adults still consider a college degree as an essential part of the American Dream. But with the cost of college more than doubling over the last two decades, many have had to resort to student loans to cope with the higher costs.
Despite this, only 5 percent of U.S. adults say their biggest financial regret was borrowing too much money to pay for school. Out of those who currently have — or have previously had — student loan debt and got their degrees, 35 percent say their degrees “greatly” opened up more job opportunities for them and increased their earning potential. Meanwhile, 24 percent said that it “somewhat did.”
But with student debt surpassing $1.76 trillion and payments set to resume later this year, student loans are still a major financial burden in Americans’ budgets across all generations. This has sparked quite the debate on whether college is still worth the cost.
Key advanced degree debt statistics
- Nearly 40% of federal student debt is owned by graduate students.
- 60% of graduate students take out federal student loans.
- On average, master’s degree holders have over $83,600 in student loan debt.
- PhD holders graduate with roughly $134,800 in student loan debt.
- Despite having more debt, advanced degree holders earn up to 45% more on a weekly basis than those with just a bachelor’s degree and have lower unemployment levels.
Who has student loan debt?
Americans across four generations (boomers, Gen Xers, millennials and Gen Z) have student loan debt. However, the majority of the population — regardless of their degree — don’t have student loans, and a great percentage of those who had them already paid them off, according to a Bankrate survey.
Among those who still carry student loan debt, those with a postgraduate degree, are the largest segment who are still repaying their loans. They’re also the largest segment when it comes to borrowing money for school, as shown in the table below.
That said, postgraduate students also represent the largest group of graduates who’ve paid off their debt. This is probably due to the fact that, on average, those with advanced degrees earn up to 45 percent more on a weekly basis than those with a bachelor’s degree, and about more than double the amount than those with just an associate’s degree.
Bankrate asked: Do you currently, or have you ever had, student loan debt for your own education?
|Education level||Currently have student debt||Had, but paid it off||Never took on student debt|
|No high school, High school graduate||8%||9%||82%|
|Some college, 2-year degree||21%||22%||57%|
How do people feel about student loan debt?
If there’s something Americans can agree on — regardless of their education level — is the fact that the cost of college has gotten out of control. As part of Bankrate’s survey, respondents were asked whether they agreed that higher education costs have gotten out of hand. The results were as follows:
- 47% of those with no high school diploma and high school graduates agree.
- 61% of those with some college or a 2-year degree agree.
- 63% of 4-year degree holders agree.
- 64% of postgraduates agree.
When it comes down to whether Americans agree that student loan debt is a national crisis, the results were pretty similar across most educational levels:
- 38% of postgraduates agreed with the statement.
- 37% of those with some college, or a 2- or 4-year degree also agreed.
- Meanwhile, only 24% of those without a high school diploma and high school graduates agreed with the statement.
The results come at no surprise considering that the cost of higher education has more than doubled over the last 20 years. Not only that, but stubborn inflation and rising interest rates have been squeezing Americans’ pockets over the past several months, making it harder not only to afford college education without the help of loans but also everyday expenses.
However, things are about to get even harder for student loan borrowers. Payments for federal student loans are set to resume this year after a three-year break. According to Bankrate’s survey, over half of those who currently have student loans are already reporting higher levels of stress compared to last year as repayment approaches. This is mainly due to the fact that payments will add an extra layer of pressure to borrowers’ already stretched budgets.
Student loans and financial assistance
Although the Department of Education has put in place a series of protections, including forgiveness programs and income-driven repayment plans, to reduce the burden of student loan repayment on Americans, a vast majority still think it’s not enough.
As part of the survey, Bankrate asked U.S. adults whether they agreed with the following statements:
Student loan borrowers are responsible for their debt and should pay it back in full
- 29% of those without a high school diploma and high school graduates agree.
- 30% of those with some college or a 2-year degree agree.
- 34% of 4-year degree holders agree.
- 28% of postgraduates agree.
The federal government has not done enough to provide financial assistance to borrowers
- 26% of those without a high school diploma and high school graduates agree.
- 32% of those with some college or a 2-year degree agree.
- 34% of 4-year degree holders agree.
- 37% of postgraduates agree.
The federal government has done too much to provide financial assistance to borrowers
- 15% of those without a high school diploma and high school graduates agree.
- 18% of those with some college or a 2-year degree agree.
- 20% of 4-year degree holders agree.
- 16% of postgraduates agree.
The federal government has done enough to provide financial assistance to borrowers
- 12% of those without a high school diploma and high school graduates agree.
- 11% of those with some college or a 2-year degree agree.
- 14% of 4-year degree holders agree.
- 14% of postgraduates agree.
Financial literacy for student loans
When it comes to student loans, the great majority agree that college students aren’t well educated on the topic of borrowing and its long lasting effects before they take out loans. However, the percentage of Americans who agree with that statement is higher, the more educated they are:
- 37% of those without a high school diploma and high school graduates agree.
- 47% of those with some college or a 2-year degree agree.
- 49% of 4-year degree holders agree.
- 52% of postgraduates agree.
Lacking knowledge about the long-term implications that borrowing money to pay for school has is highly concerning, especially considering that 52 percent of U.S. adults say that money issues negatively impact their mental health.
Being financially literate and fully understanding the financial implications of their financial actions can potentially help people save money by making better financial decisions. This, in turn, can alleviate stress and improve their overall quality of life. That’s why it’s important to help both borrowers and students understand all of their options when it comes to student loans, so they can make decisions that will benefit them in the future, instead of hindering their growth.
That said, financial literacy is just a piece of the puzzle when it comes to higher education and student loans.
“The issues with the student loan system evolved over a number of years and surfaced due to several factors, such as the number of repayment plans available, federal student aid not keeping pace with the cost of college, and a lack of education around borrowing to pay for school,” Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), says.”
“It would be far too optimistic to think that there is a silver bullet in this situation. This is going to take change from all stakeholders, from the federal government and their contracted loan servicers, to institutions of higher education and financial aid offices, to student borrowers and their families,” he adds.
Student loans FAQ
After more than three years of interest-free moratorium, payments on federal student loans are set to resume in October. The Department of Education will notify borrowers of the exact date when their payments will be due. However, it’s worth noting that although payments won’t be required until then, interest on federal student loans will begin to accrue on Sept.1, 2023.
Student loans are divided into two main categories: federal and private. Both of these loans are a type of installment loan, meaning that they are repaid on a monthly basis over a set period of years.To apply for federal student loans, you need to fill out the FAFSA. These loans are issued based on academic standing — not on credit — so almost any student can qualify for these. The limit, however, will depend on your dependency status and number of credits completed. These loans have fixed interest rates, and the interest rate can be subsidized or unsubsidized.Private student loans, on the other hand, are offered by banks, credit unions and online lenders and are issued based on credit. So the amount you’ll be eligible for will depend on your credit score and income, as well as your certified cost of attendance. Since many students don’t meet these requirements, these loans typically allow you to apply with the help of a co-signer that meets these criteria. When it comes to interest rate, private loans can have either a fixed or variable interest rate.Both federal and private loans typically don’t require students to make payments until six months after they graduate or drop below half-time status. However, interest rates may accrue during this time.
Student loan consolidation consists of combining multiple loans into a single one. This, in turn, can make repayment easier, as you’ll only have to worry about making one payment each month, instead of multiple deadlines from multiple servicers.To apply for student loan consolidation, simply log into your account on StudentAid.gov and fill out the required information.
Federal student loans have a standard repayment term of 10 years. However, repayment can take between 10 to 30 years, depending on the type of loan you have (federal vs private), as well as the repayment plan you’re currently enrolled in (in the case of federal student loans).
The average bachelor’s degree holder graduates with $34,700 worth of debt. However, this number fluctuates depending on the type of institution they attend (public vs. private) and other factors, such as student aid and residency status.