Student loan debt can feel like a millstone hanging around your neck. The more you study, the bigger your debt—and the longer it takes to pay off. If you have a good amount of student debt, you’re not alone. You probably fall right in the average student loan debt for the United States.
So what is the average? We’re here to give you some insight. Keep reading to learn more about student loans and the average student loan debt.
Student Loan Debt Snapshot
College tuition fees have gone up substantially over the past few decades. In fact, according to a recent analysis, the average cost of a four-year degree in the United States has increased more than 497% since 1985. That’s twice the rate of inflation.
Student debt has also gone up. Collectively, 45 million borrowers in America now owe about $1.71 trillion in student loan debt. Here are some other important student loan stats:
- Average U.S. student loan debt per person: $36,510
- Average monthly student loan payment: $393
- Approximate student debt payoff period: 10 to 30 years
Part of the reason for rising student loan debt is that more people than ever go to college. More than two-thirds of high school graduates now pursue higher education, which is a good thing. Student loans, while potentially cumbersome, allow people without the means to pay in full the opportunity to get a degree. So, student loan debt isn’t allbad—it can help create opportunities.
Average Student Loan Debt—A Breakdown
Student loan debt accounts for a large proportion of the total debt in America. In fact, only mortgage debts come higher on the “you owe us” list. Mortgage debts, incidentally, total $10 trillion in the U.S.
According to a survey by Brookings, just 6% of graduates hold a full third of all outstanding student loan debt. These burdened borrowers owe more than $100,000 each. With that said, the graduate or professional degrees that account for such high debts make it easier to get high-paying jobs and, in turn, pay off student loan debt. Ironically, people who owe less sometimes have a much harder time making payments.
Tuition Costs Are Rising
As we mentioned earlier, student loan debt has increased nearly 500% since 1985. We can trace the increase back much further than that, though. In 1971, the average cost for a four-year public university degree—including room and board—came to $8,734 in today’s currency.
Things have obviously changed. In 2021, students pay an average of $35,720 per year to attend college in the United States. To break that down a little further, in-state students attending public college pay $25,615 for a single academic year, while private students pay $53,949 per year. Only a portion of those costs relate to tuition.
It isn’t hard to see how, over four years, borrowers end up in so much debt. It also isn’t tough to imagine whystudent loans are so popular in the first place.
Two-Thirds of High School Graduates Enroll in College
Only a third of high school graduates enter the world of work without a degree in hand. That’s good news, but it does also account for some of the increase in student loan debt. Between 1975 and 2016—the most recent official data available—the share of low-income students in higher education rose from 31.2% to 65.4%.
Things for students in poverty, and for non-white students, has also improved. Between 1996 and 2016, the proportion of undergraduates in poverty rose from 12% to 20% at colleges across the board. In 1996, only 29% of undergraduates were non-white—by 2016, 47% of undergraduates were non-white.
A COVID-19 Dip in Low-Income College Enrollment
Unfortunately, COVID-19 had a negative impact on low-income student enrollment. Had the pandemic not happened, the percentage of low-income college students might have increased year upon year since 2016. Official government data isn’t yet available, but a recent analysis by the National Student Clearinghouse Research Center noted a 10.7% drop in college enrollment in low-income high schools in 2020.
Low-income students may still choose to enroll in college after the pandemic. Nevertheless, these figures represent the tangible impact of coronavirus on potential students from low-income backgrounds, many of whom might otherwise have obtained student loans.
Debts and Monthly Payments
Graduates in America owe about $36,510—which is about the same as a nice new car. Borrowers pay about $393 every month toward student loan balances. That’s a 60% increase—or $166—on 2005, when average payments came to $227 per month.
In March 2020, the U.S. Department of Education Office of Federal Student Aid suspended loan payments and froze interest rates in response to the COVID-19 pandemic. Students with government-backed student loans no longer had to make monthly payments. Some private student loan payments were suspended in a similar manner. At the moment, the student loan payment suspension and the related interest charge freeze is set to end in September 2021.
Student Loan Borrower Age
Perhaps surprisingly, 30-to-44-year-olds have the highest share of student loan debt. They collectively owe $823.2 billion, or 49% of the total student loan debt in the U.S.A. Let’s take a look at a few other little-known student loan statistics:
- Borrowers under age 24 hold an average of $16,500 in student loan debt.
- With a $42,600-per-borrower balance, graduates aged 35 have the highest student loan debt balance.
- Those 35-year-old borrowers end up—on average—owing 287% more than their original loan balances.
Federal student loans are usually repaid over 10 years, but borrowers with limited incomes can apply for 20-year income-driven repayment plans—REPAYE plans or IBR plans, for instance.
Wondering how long it might take you to pay off your student debt? In 2019, a New York Life study found that people took, on average, 18.5 years to pay off their student loan balances. Most borrowers finally escaped student loan debt at the age of 45.
The Demographics of Student Loan Debt
According to available data, loan debt tends to be a bigger burden for African American and Hispanic borrowers and first-generation college students. First-generation college students find payments much harder to keep up with than their peers whose parents attended college. Similarly, Black and Hispanic borrowers have greater trouble making payments and paying student loan debts off in full.
Many experts agree that the financial difficulties for African American, Hispanic and first-generation graduates stem from underlying economic inequality and systemic racism. Lower family income, coupled with lower earnings after graduation, pits the odds against Black, minority ethnic and first-generation borrowers.
Delinquency and Student Loans
Student loan payments can be very hard to keep up with during tough economic times. Thankfully, the measures put in place by the Department of Education at the beginning of the pandemic gave many graduates a little breathing room. These initiatives are now due to end in just a few months’ time, though. So, what if you can’t afford your student loan repayments after September?
First, try to avoid delinquency or default. If you can’t make a payment—or several payments—contact your lender right away. You may be able to restructure your loan, or you may be eligible for further forbearance. If you do end up missing payments, stay in touch with your lender and arrange a rehabilitation plan as soon as possible.
Paying off Student Loan Debt is Doable
Education is undoubtedly important, but the financial burden it brings with it can be crippling—especially in hard times. Thankfully, there are things you can do to bring your student loan debt under control, to refinance your student loans or to get back on track with payments if you’ve gotten behind.
In the wake of the pandemic, it’s more important than ever to keep track of your credit—especially if you’re dealing with student loan debt. To see a credit snapshot, sign up for Credit Report Card from Credit.com. For a more in-depth look at your profile, subscribe to ExtraCredit and view all three of your credit reports—and 28 of your FICO scores—every month.
