As of August 2020, student debt is at more than $1.67 trillion in the United States, second only to mortgage debt and well above both credit card and auto loan debt. It has taken over many Americans’ ability to buy homes, get married or expand families.
Paying for college isn’t getting more affordable for most families. Here’s a breakdown of student loan debt with the most recent figures and how you can tackle it.
What was student loan debt like in 2018?
Most figures that break down the personal impact of student loans for 2019 and 2020 aren’t fully vetted yet, making 2018 the latest complete year that data is available.
According to The Institute for College Access & Success (TICAS), almost two-thirds (65 percent) of students who graduated in 2018 had student loan debt.
That’s not including people who were already repaying their student loans. Roughly one out of every six Americans — or about 43 million — owed student loan debt in some form in 2018, according to the Center for American Progress. One-third of all adults ages 25 to 34 have a student loan.
Average student loan debt
Student loan debt varies by the type of institution. Private school students are borrowing more money than those who attend public universities. The most recent data available from TICAS and College Insight break down student loan debt by public and private universities as late as the 2017-18 school year.
- Average student loan debt for students graduating in 2018 was $29,200, up 2 percent from 2017.
- The amount of money owed for student loans varies widely by state. Utah’s average was $19,750 and Connecticut’s was $38,650.
- Institutions matter as well. Private student loan debt was $33,148, and public student loan debt was $27,777.
Total student loan debt
Student loan debt continues to mount. While complete figures are available for earlier years, total student loan debt can be broken down by private and federal debt using data from Credible.
- Total federal student loan debt: $1.5 trillion.
- Total private student loan debt: $119 billion.
- Total number of federal student loan borrowers: 43 million.
Student loan repayment status
The Federal Reserve Bank of New York says that even though millions of loans are delinquent or in default, they are probably underrepresented due to loans in deferment, forbearance or grace periods that are currently not being paid.
Consider these key stats from Experian:
- Federal student loans that are 90-plus days delinquent or in default: 12 percent.
- Federal student loans in repayment: 55.8 percent.
- Federal student loans in deferment or forbearance: 19.8 percent.
Many federal student loans are also in some sort of income-driven repayment plan. Here’s a breakdown of repayment plans as of December 2018, according to the U.S. Department of Education:
- Standard repayment plan (10 years or less): 12.7 million.
- Pay As You Earn (PAYE): 1.31 million.
- Revised Pay As You Earn (REPAYE): 2.57 million.
- Income-Based Repayment (IBR): 3.57 million.
- Income-Contingent Repayment: (ICR): 690,000.
- Graduated repayment plan (10 years or less): 3.39 million.
Reasons student loan debt continues to rise
Every year, more students graduate with student loan debt than the year before. In 2010, the United States had $749 billion in federal student loan debt. A decade later, that number has more than doubled.
There are a few reasons student loan debt continues to go up, including:
- Cost of attendance: College Insight data shows that for the 2017-18 school year, students paid $9,333 just in tuition and fees to attend a public four-year university. In 2007-08, it was $6,098. The more a student has to pay to attend college, the more money they need to borrow.
- Longer repayment: With income-driven repayment plans, deferment, forbearance and default, there are millions of borrowers who are taking decades to pay off loans. Longer repayment periods, paired with new students taking out student loans to pay for school, means a rise in debt.
- Private student loan needs: If grants, scholarships and federal student loans don’t cover the full cost of attendance, many students turn to private student loans to fill in the gaps. Even though private student loans make up a smaller fraction of overall student loan debt, they cost more. Private student loans may have higher interest rates and more fees than federal student loans.
Ways to eliminate student loan debt
If you’re dealing with mounting student loan debt, you have a few options for tackling it.
- Consolidate loans: If you have federal student loans, consider consolidating all of them into one. You probably won’t lower payments or your interest rate, but it can help you stay on top of your monthly payment if you only have to keep track of one due date rather than many. And if you’re lucky enough to lock in a lower interest rate, you might be able to trim your overall monthly payments.
- Enroll in an income-driven repayment plan: You’ll make affordable payments based on your income and the number of people in your household. After 20 or 25 years of qualifying payments, the remaining balance on your loan is forgiven. You may also qualify for specific loan forgiveness programs based on your profession, which could trim down your repayment period even further.
- Make additional payments or increase monthly payments: If you have the means, avoid making minimum payments and instead chip away at your total balance by making higher monthly payments. If you get a bonus at the end of the year, make an additional payment on your loans.
- Refinance: If you have a mix of federal and private student loans, refinancing might lower your monthly payments, interest rate or both. If you have good credit and can secure a lower interest rate than what you’re paying now, explore different refinancing avenues to see if it’s the right fit. But remember that you lose federal protections when you refinance, since you’ll have to do so with a private company.