American borrowers collectively owe over 1.7 billion in student loan debt, reaching an all-time high after a decade of steady growth. Tuition increases, interest rate hikes and a red-hot economy have left students graduating with unprecedented amounts of debt in an uncertain economic climate.

While millennials and Gen Xers shoulder most of the nation’s student debt, Gen Zers are anticipated to quickly overtake the two generations when it comes to borrowing for a college education.

Here’s how student debt has impacted each generation of borrowers and what the future cost of a college education could look like for future Gen Z students.

Student loan debt statistics

As indicated by the most recent data, Generation X holds the largest share of federal student debt, with an outstanding amount of $525.3 billion. Millennials come in a close second, collectively owing $482.4 billion in student loans.

While it can be attributed to their age range, Gen Z holds the least outstanding federal debt. Collectively, those who fall within this generation owe $104.2 billion.

Student loan debt for millennials

Millennials shoulder a large portion of the nation’s debt and are most likely to report that student loan debt is a problem for young borrowers. Here’s how student debt is currently affecting millennials.

  • Over 7.1 percent of millennials held balances over $50,000 in June 2006, compared to 7.8 percent of Gen Zers in June 2022.
  • As of June 2022, 27.7 percent of older millennials carry $10,000 in debt or less.
  • 43.5 percent of millennials ages 36 to 41 owed $20,000 or less in 2022.
  • Over 79 percent of millennials report that student debt is a problem for young people in the United States.
  • Of those in March 2022 who owed over $200,000 in student debt, 31 percent are under 35 years old.
  • Millennials ages 35 to 49 held an average federal loan balance of $43,400 as of Q2 2022.

Student loan debt relief for millennials

Millennials who hold outstanding debt have many debt relief options, especially those who hold federal student loan debt. Aside from Biden’s potential forgiveness plan and the federal student loan payment pause (that’s set to extend through June 30 at the latest), here are some debt relief options available to millennials.

  • General forbearance: The current administrative forbearance is granted automatically to all federal borrowers. However, the Education Department also offers a general forbearance for up to 12 months if you face financial hardship. Private lenders may also offer hardship forbearance for those who qualify, but the details and time length will vary from lender to lender.
  • Refinancing: Refinancing involves taking out a new private loan to pay off your existing loan debt with a lower interest rate. However, refinancing will eliminate every federal relief option, so consider all other options first. If you can score a lower rate, it’s worth considering after the forbearance period ends.
  • Repayment plans: There are multiple repayment options available to federal borrowers, like graduated repayment — that extend your repayment timeline to provide some monthly relief. Private lenders may offer similar plans, so check with your lender to see what’s available.

Student loan debt for Gen Z

Born between the mid-1990s and mid-2010s, Gen Z is the generation that could likely feel the financial weight of student loan debt the heaviest when compared to the preceding generations.

Due to the widespread necessity for a postsecondary degree and the rise in higher education, Gen Zers, compared to older millennials — who graduated at the same age as today’s students — are more likely to hold debt and tend to have higher balances upon graduation.

  • In June 2022, the median value of a Gen Zer’s loan was $12,800.
  • The average Gen Zer carried around $15,000 in student debt as of March 2022.
  • As of 2022, 66.7 percent of older Gen Zers had $20,000 or less in student debt.
  • The largest percentage (28 percent) of college students aged 24 and younger have between $5,000 and $9,999 in Federal Direct Loans as of March 31, 2022.
  • 7.4 million borrowers are 24 years old or younger.

Student loan debt relief for Gen Z

While the benefits apply to every current borrower, Gen Z is set to reap the benefits of improved relief benefits and alternative repayment options more so than the previous generation.

  • Income-driven repayment (IDR): An IDR plan is a federal payment plan that sets your monthly payment based on your income and family size. After 20 to 25 years of qualifying payments, the remaining balance is forgiven. The monthly payments on an IDR plan are often much smaller than the original payments on the standard plan.
  • Pay As You Earn (PAYE): PAYE and the Revised Pay As You Earn (REPAYE) are federal plans that set your monthly payment at 10 percent of your discretionary income. After 20 to 25 years of payments, your balance is forgiven. Which one you qualify for depends on your level of hardship. Generally, PAYE is better for married borrowers, and REPAYE suits single borrowers better.
  • Public Service Loan Forgiveness (PSLF): PSLF is an occupation-based federal forgiveness plan. It forgives the remaining federal student loan debt after an eligible public servant makes qualifying payments for 10 years.

Student loan debt for Gen X

While Gen X may not have taken out as much student debt as Gen Zer’s have had to, they’re the generation shouldering most of the nation’s outstanding debt.

  • As of 2021, the average Gen Xer had $46,317 in student loan debt.
  • 1.4 million Gen Xers between ages 35 and 49 carry over $500 billion in student debt.
  • Over the last five years, 35 to 49 year olds experienced a $149.5 billion increase in total student loan borrowing.
  • As of Q4 2022, 14.6 million Gen Xers held federal student loan debt.
  • Borrowers aged 35 to 49 had the highest reported delinquent student loan payments across all generations, owing a collective $15.5 billion.

Student loan debt relief for Gen X

For those who have been trapped in an endless cycle of high-interest debt, there are payment relief methods that can help you make progress on paying down your student loans.

  • Consolidation: Student loan consolidation only applies to federal debt and is similar to refinancing in that you take out a new Direct Loan to pay off existing federal debt. Consolidating can make your balances easier to manage and can save money in interest. For those with private and federal loans, refinancing may be worth it after the federal forbearance period if you’re offered a lower rate.
  • Student loan discharge: The Education Department — and several private lenders — offer loan forgiveness should you meet the specific program criteria. Becoming totally and permanently disabled, school fraud or closure, and in rare cases bankruptcy, are a few examples of situations that qualify for discharge.
  • Deferment and forbearance: Financial hardship-based general deferment and forbearance are short-term options that can help federal borrowers get back on their feet for a set number of months. Deferment allows borrowers to stall their payments free of interest accrual, while forbearance requires that borrowers pay interest during the period. Private lenders may offer similar relief programs and the details will vary from lender to lender.

Student debt forgiveness

President Biden’s student debt relief plan would forgive up to $20,000 for qualifying federal borrowers; however, this plan is currently on hold as the Supreme Court reviews a lawsuit filed against the plan.

As the judges prepare to hear oral remarks in February, the program is officially halted, and the results are expected to be made public come late Spring or early Summer. As of now, the application has been taken down, no loans have been forgiven, and the payment pause has been extended until June 30 in lieu of the ongoing litigation.

The bottom line

Student debt impacts each generation differently; Gen Z is expected to take out the most debt while Gen Xers carry the largest portion of outstanding debt. Even though millennials shoulder a large amount of debt, older Gen Zers (in June 2022) carried 13 percent more student debt when compared to older millennials’ student debt (in June 2006).

Considering that many Gen Zers haven’t started or have yet to finish their college education, the amount of debt that older Gen Zers carry when compared to previous generations indicates that they’re most likely to feel the weight of their student debt as college tuition continues to increase.