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Student loans have gotten a bad rap over the years — and rightly so. Nearly 60 percent of U.S. adults with student loans have put off important financial decisions, such as buying a home or saving money for retirement, due to their debt. But with the cost of college rising each year, many Americans need them to fill the financial gap when other types of aid fall short.
Although payments for federal student loans have been paused for over three years, they will be resuming shortly. If you foresee you’ll have issues repaying your loans, there are some options that can ease the burden of student debt.
Key student loan debt statistics
- 43.6 million Americans have federal student debt.
- In total, the U.S. has over $1.77 trillion in outstanding student debt.
- Student loans are the second-largest type of consumer-generated debt behind mortgages, accounting for 9.5 percent of the nation’s consumer debt.
- 54 percent of college undergraduates finish college with student loan debt.
- The average college student borrows $29,100 in loans to pay for their degrees.
- The average borrower has over $37,000 in federal student loan debt.
How much student loan debt is there?
Student loan debt is the second largest form of consumer lending debt in the U.S. Currently 43.6 million borrowers in the U.S. have student loan debt, with the total outstanding federal loan debt reaching $1.77 trillion — a 1.57 percent increase from 2022.
However, as college costs continue to increase, so does general concern about college affordability and the need for loans to fill in the blanks. More than half of U.S. adults think the cost of higher education has gotten out of hand, with 44 percent saying that students aren’t fully aware of the negative consequences borrowing can have before they take out a loan.
But while 32 percent of Americans feel that student loan debt is a national crisis, 30 percent say that — despite not knowing enough about loans at the time of borrowing — borrowers should still repay their debt in full.
The U.S. student debt crisis
Data from the Federal Reserve shows that the total outstanding student loan debt has increased by roughly 55 percent since 2013.
|Year||Total outstanding student debt (in millions)|
|Source: The Federal Reserve|
The largest form of consumer debt in the U.S. is mortgage debt at $12.04 trillion in the first quarter of 2023. Student debt is the second largest form of consumer debt, followed by auto debt.
Student loan debt and the end of the repayment pause
On June 30, 2023, the Supreme Court blocked the Biden Administration’s one-time student loan forgiveness plan, which would’ve canceled up to $20,000 in federal student loans to borrowers who met the specified criteria. The Supreme Court’s decision also means that payments for federal student loans will resume this October.
Although this isn’t good news for student loan borrowers, particularly those struggling, there’s still hope. “While the majority of the Supreme Court shamefully ignored the clear letter of the law by striking down student debt relief, President Biden is not backing down,” says Ella Azoulay, research and policy analyst at the Student Borrower Protection Center (SBPC).
Student loan debt and the CARES Act
The CARES Act was implemented as a way to alleviate the financial strain of the pandemic. One of the provisions was a pause on federal student loan payments and collections activities, which is currently in place.
The most recent report from the U.S. Office of Federal Student Aid (FSA) found that:
- Nearly 27 million Direct Loan borrowers are in forbearance status, with more than 99 percent of those balances in the CARES Act forbearance.
- Roughly $1.1 trillion of Direct Loans are in forbearance status.
- About 305,000 Direct Loan borrowers are in repayment status, opting out of the CARES Act flexibilities.
“Before the pandemic, tens of millions of borrowers and their families were crushed by overwhelming and unmanageable student loan balances,” Azoulay says.
“While the student debt crisis is known to be a barrier preventing borrowers from achieving financial stability and other milestones, such as homeownership, the payment pause helped borrowers improve their credit and get out of default,” she adds.
Individual student loan debt statistics
Here’s how student loan debt in the U.S. impacts individual borrowers.
- According to a survey by creditcards.com, a Red Ventures company, 24 percent of millennials have student loan debt.
- About 64 percent of students seeking a bachelor’s degree from a four-year public institution have student loan debt.
- Residents of Washington, D.C., Maryland and Georgia have the highest student loan debt in the country, with the average student loan debt exceeding $40,000 in all three areas.
- 33 percent of borrowers owed $10,000 or less in federal student loans, and 73 percent owed $40,000 or less.
- The average in-state student at a four-year, public institution spends $26,027 for one academic year. The average private university student spends $55,840.
Student debt and mental health
Student loan debt can have a significant impact on a borrower’s mental health. Feelings of anxiety and stress may coincide with long-term debt, especially if the debt impedes the ability to meet important financial milestones, like saving for a house or buying a car.
According to a survey by ELVTR, 54 percent of respondents reported mental health issues related to student debt. The survey also found:
- 56 percent reported experiencing anxiety.
- 32 percent had depression.
- 20 percent experienced sleeping problems.
- 17 percent reported panic attacks.
Additionally, 10 percent of respondents said they had other mental health issues not listed above.
Federal student loan debt statistics
Federal student loans are offered by the U.S. Department of Education rather than private lenders. They’re a good first choice for any student considering student loans, and they comprise more than 90 percent of the U.S. student debt portfolio.
Student loan debt by loan type
All new loans originated by the federal government are part of the Direct Loan program: Direct Subsidized Loans, Direct Unsubsidized Loans, grad PLUS loans, parent PLUS loans and Direct Consolidation Loans. Because of this, Direct Loans make up the greatest portion of the federal student loan portfolio. However, there are still borrowers who are paying off older Perkins or Federal Family Education Loan (FFEL) Program loans.
Here’s how total loan amounts have changed for each loan type in the past three years:
|Direct Subsidized (in billions)||Direct Unsubsidized (in billions)||Grad PLUS (in billions)||Parent PLUS (in billions)||Perkins (in billions)||Consolidation (in billions)|
|Source: U.S. Department of Education|
|2020 – Q1||$279.6||$516.3||$75.3||$95.6||$5.9||$542.4|
|2020 – Q2||$282.9||$528.5||$78.8||$99.4||$5.6||$547.7|
|2020 – Q3||$282.3||$529.1||$79.5||$98.3||$5.4||$550.2|
|2020 – Q4||$285.7||$539.8||$82.8||$100.8||$5.2||$552.1|
|2021 – Q1||$285.2||$539.4||$82.7||$100.3||$4.9||$552.6|
|2021 – Q2||$289.8||$552.7||$86.3||$103.6||$4.7||$554.7|
|2021 – Q3||$288.7||$553.5||$87.3||$102.8||$4.3||$554.5|
|2021 – Q4||$291.5||$563.5||$90.7||$105.4||$4.4||$555.1|
|2022 – Q1||$290.9||$562.5||$90.6||$104.8||$4.2||$553.3|
|2022 – Q3||$291.9||$571.5||$94.9||$106.3||$4.0||$548.7|
|2022 – Q4||$294.3||$579.3||$97.9||$108.5||$3.9||$550.6|
|2023 – Q1||$293.0||$574.1||$96.7||$107.6||$3.8||$560.3|
|2023 – Q2||$296.2||$584.9||$100.7||$111.7||$3.7||$547.3|
Student loan debt by state
The three states with the lowest student debt per borrower are North Dakota, Iowa and South Dakota; in each of these states, the average student debt per borrower comes in at less than $32,000.
The three states with the highest student debt per borrower are Maryland, Georgia and Virginia, where the average debt per student is near or above $42,000. Washington, D.C., has the highest average debt per student overall at $54,863.
The chart summarizes each state’s total federal student loan balance, the number of borrowers and the average federal student debt per borrower as of March 31, 2023.
Location Federal debt (in billions) Number of borrowers (in thousands) Average federal debt (per borrower) Source: U.S. Department of Education Alabama $24.3 649.9 $37,390 Alaska $2.4 68.9 $34,833 Arizona $32.6 915.9 $35,593 Arkansas $13.5 400.3 $33,725 California $149.7 3,997.1 $37,452 Colorado $29.6 798.0 $37,093 Connecticut $18.5 514.4 $35,964 Delaware $5.1 133.4 $38,231 District of Columbia $6.6 120.3 $54,863 Florida $105.5 2,720.9 $38,774 Georgia $71.0 1,693.1 $41,935 Hawaii $4.7 124.2 $37,842 Idaho $7.4 223.7 $33,080 Illinois $63.7 1,655.7 $38,473 Indiana $30.5 921.0 $33,116 Iowa $13.6 441.5 $30,804 Kansas $12.9 390.9 $33,001 Kentucky $20.4 614.1 $33,219 Louisiana $23.4 668.3 $35,014 Maine $6.5 192.5 $33,766 Maryland $37.0 854.9 $43,280 Massachusetts $32.5 929.8 $34,954 Michigan $52.1 1,427.5 $36,497 Minnesota $27.3 804.7 $33,926 Mississippi $16.7 447.7 $37,302 Missouri $30.2 847.1 $35,651 Montana $4.4 130.9 $33,613 Nebraska $8.2 254.0 $32,283 Nevada $12.3 361.0 $34,072 New Hampshire $6.8 195.7 $34,747 New Jersey $45.1 1,239.4 $36,389 New Mexico $8.0 232.4 $34,423 New York $95.7 2,510.0 $38,127 North Carolina $51.7 1,352.3 $38,231 North Dakota $2.7 90.5 $29,834 Ohio $63.5 1,816.5 $34,957 Oklahoma $16.1 504.1 $31,938 Oregon $20.6 549.5 $37,489 Pennsylvania $66.9 1,865.5 $35,862 Puerto Rico $10.0 335.7 $29,789 Rhode Island $4.9 149.1 $32,864 South Carolina $29.2 758.1 $38,517 South Dakota $3.8 120.2 $31,614 Tennessee $32.6 889.1 $36,666 Texas $127.3 3,810.5 $33,408 Utah $10.6 319.7 $33,156 Vermont $3.0 79.4 $37,783 Virginia $44.1 1,110.3 $39,719 Washington $29.1 805.5 $36,127 West Virginia $7.4 231.0 $32,035 Wisconsin $24.0 741.5 $32,367 Wyoming $1.8 56.3 $31,972 Other $4.5 95.7 $47,022 Not Reported $75.1 2,984.3 $25,165
Private student loan debt statistics
Private student loans are offered by online lenders, banks and credit unions. While private student loans should only be taken out once federal aid potential has been exhausted, they still account for almost a tenth of student loan debt in America.
Here’s how private student loans contribute to the overall levels of student debt in the U.S., according to data from the Education Data Initiative.
- The total outstanding private loan debt balance is more than $120 billion, or 8.4 percent of the total student loan debt in the U.S.
- Undergraduate loans made up about 88 percent of this total number, while graduate loans made up roughly 11 percent.
- Less than 2 percent of private student loans defaulted in the fourth quarter of 2021.
- 7.2 percent of students use private student loans.
Student loan debt by degree
Advanced degrees are expensive, but the investment could pay off. Here’s what you need to know before taking out graduate student loans.
- Graduate students account for 39 percent of federal student loan debt.
- The average debt for those with Master’s degrees is $83,651.
- The average debt for those with PhDs is $134,797.
- 60 percent of graduate students borrow federal loans.
- Those who earn an advanced degree earn up to 45 percent more on a weekly basis than those with just a bachelor’s degree, according to BLS data.
- Those with advanced degrees also experience lower unemployment levels.
Student loan FAQs
When you refinance your student loans, you’re essentially taking out a new loan to pay off your existing debt. This new loan will have new terms and interest rates. Refinancing is almost always a good alternative if you have private student loans, however, if you have federal loans you may be better off looking into consolidation instead.
Follow these five steps to refinance your student loans.
- Check your credit: Your credit plays a key role in determining your interest rate, so the higher, the better. Knowing your credit score will also help you determine which lenders you can borrow money from, as each of them has a different set of credit requirements.
- Compare rates: Lenders offer different rates and terms. Some of them also allow you to pre-qualify to see what you may be eligible for, without hurting your credit. Make sure you get prequalified with at least three lenders to get the best offer.
- Choose a lender: After reviewing offers, choose the one that best fits your budget and financial needs.
- Fill out the application: For this step, you’ll need a few documents, including proof of identification, the most recent statements from your student loans and proof of income.
- Sign your loan documents: Once you’re approved for the loan, you’ll get all your documents via email or by snail mail. You’ll have a few days to sign everything and get it back to the lender, so they can pay off your existing loans and you can start making payments.
Scholarships are a type of gift aid, meaning you don’t need to repay them back. You can get them at your school, local organizations and associations.
Student loans, on the other hand, are offered by the federal government or private lenders. These loans are charged interest on top of the original amount you borrowed and must be repaid once you graduate or drop below half-time enrollment.
The process for getting a student loan will depend on the type of student loan you’re applying to.
To apply for federal student loans, you’ll need to fill out the FAFSA. To do this, you’ll have to visit StudentAid.gov and provide the following information:
- Your Social Security number.
- Your driver’s license.
- Your household size and income.
- Your school’s information.
The form will likely take about 30 minutes to complete, after which both you and your school will get a document known as the Student Aid Report (SAR) to determine your eligibility for loans.
To apply for private student loans, you’ll need to do the following:
- Calculate how much you need.
- Check your credit score.
- Research and compare lenders.
- Gather all of the necessary information, including your Social Security number, proof of ID, proof of income, statements of debts and assets and your school’s information.
- Prequalify with at least three lenders to see which one gives you the best offer, without hurting your credit.
- Pick a lender and fill out an official application.
- Add a co-signer if you don’t have a job or another source of income.
- Submit your application and wait for a decision.
For more details on how to apply for both federal and private student loans, check out the full guide to getting a student loan.