Home > Student Loans > 5 Insane Student Loan Stats

Comments 0 Comments
Advertiser Disclosure


[UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned below.]

College graduates with student loans accumulate less lifetime wealth than their debt-free classmates, according to a study released this month.

“Though a college education remains the surest path to a middle-class life, evidence has begun to mount that student debt may be far more detrimental to financial futures than once thought, particularly for those with the highest levels of debt: students of color and students from low-income families,” writes Robert Hiltonsmith. His study was published Aug. 1 by public policy organization Demos.

Using a variety of datasets to create a model of indebted and debt-free households, Hiltonsmith’s analysis highlights some striking realities for those saddled with student loan debt. These five student loan stats stuck out:

1. A dual-head, college-educated household with average student loan debt loses nearly $208,000 of wealth in a lifetime.

Sixty-six percent of college students graduate four-year institutions with an average of $26,600 in student loans. If both heads of house carry that burden, the family is paying off $53,000 in student loans, which impacts the ability to spend and save.

2. Student loan debt has quadrupled in 10 years.

That means student loan debt now totals $1 trillion nationwide. That statistic was available before this report, but it takes on new meaning with Hiltonsmith’s analysis. Factor in the calculations from this study, and that $1 trillion in debt translates to $4 trillion in lost wealth for a household with education debt.

3. Nearly two-thirds of that wealth loss comes from lower retirement savings.

That’s $134,000 lost in a lifetime. As recent college graduates organize their finances, they should not only address loan payments but also plan to save for retirement. Take away the loan payments, and those grads have more money to save.

4. Debt-laden households earn less than debt-free households over their lifetime.

The model estimates show an interesting comparison: Graduates with loans initially earn more money than their counterparts without loans. As time goes on, the earning levels of debt-free graduates grow at a higher rate and surpass the salaries of indebted graduates.

The study’s findings show less job flexibility and mobility for earners with education debt, likely because of the need to meet monthly loan payments.

5. Those with student loan debt pay more to buy a home.

Specifically, households with education debt face higher interest rates and monthly payments on their mortgages. Based on the study’s model, education debt makes a difference in early life milestones.

“Debt-free households purchased more expensive homes, put down a larger down payment, and paid a lower mortgage interest rate than indebted households as well,” Hiltonsmith writes.

This impacts home equity for households with student loans, and more than a third of that $208,000 wealth-loss figure is attributed to lower home equity.

Image: Hemera

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team