Student loan debt statistics
Students preparing to graduate are well aware that degrees come with a hefty price tag. But just how much student debt are Americans taking on?
How much will I borrow for higher education?
New data from the Federal Research Bank of New York reveals that at the end of 2016, some 44 million students had taken on debt for their education — to the tune of a whopping $1.31 trillion. Reaching a record high for the 18th straight year, this debt threatens to hobble generations of graduates.
Only about a decade ago, students left college with about $20,000 in loans. In 2015, the average student had tacked on an extra $14,000 for a total of $34,000 — a 70% increase. Today, student loans are part and parcel in the pursuit of higher education.
Why do we even need student loans?
Student loans are designed to help future graduates tackle the costs of tuition, living expenses and more so they can focus on putting their pencils to paper in school.
You can typically put student loans toward any education-related expense:
- Tuition and fees
- Dorms or other housing
- Transportation
- Books and supplies
- Meals and groceries
| Type of federal loan | Type of student | Fixed interest rate for loans disbursed after July 1, 2017 |
|---|---|---|
| Direct subsidized loans | Undergraduate | 4.45% |
| Direct unsubsidized loans | Undergraduate, graduate or professional studies | 4.45%–6% |
| Direct PLUS loans | Parents and graduate or professional studies | 7% |
| Perkins loans | Undergraduate, graduate or professional Studies | 5% |
American student debt at a glance
Among all totals borrowed, students are taking out a range of loan amounts to meet their educational needs. The largest group, comprising more than 12 million people, borrows between $10,000 and $25,000. Over 400 thousand people are the outliers, borrowing upward of $200,000.
| Balance in 2015 | Number of borrowers |
|---|---|
| $1 to $5,000 | 8,960,200 |
| $5,000 to $10,000 | 7,740,700 |
| $10,000 to $25,000 | 12,434,400 |
| $25,000 to $50,000 | 8,319,600 |
| $25,000 to $50,000 | 8,319,600 |
| $50,000 to $75,000 | 3,341,100 |
| $75,000 to $100,000 | 1,350,800 |
| $100,000 to $150,000 | 1,116,500 |
| $150,000 to $200,000 | 500,400 |
| $200,000 or more | 415,400 |
How student debt has grown over time
As time moves on and more people go — or go back — to school, they’re taking on more substantial student debt. The Federal Reserve Bank of New York’s report reveals that every generation’s average student loan balances have increased by 256% overall in the past 10 years.
Students younger than 40 account for 65% of borrowers, a generation that’s grown its loan balances by about 200% since 2004. Borrowers over 60 have jumped their borrowing by a full 1,000% since 2004.
| Year | Under 30 | 30s | 40s | 50s | 60s |
|---|---|---|---|---|---|
| 2004 | $146 | $114 | $49 | $31 | $6 |
| 2006 | $194 | $154 | $69 | $48 | $13 |
| 2008 | $248 | $202 | $96 | $67 | $20 |
| 2010 | $299 | $257 | $127 | $91 | $29 |
| 2012 | $320 | $320 | $163 | $113 | $43 |
| 2014 | $369 | $383 | $208 | $136 | $58 |
| 2015 | $376 | $408 | $229 | $149 | $66 |
Who are the main borrowers?
Today, 44 million students of all ages are taking out student loans to take on the financial woes of school. The highest group of borrowers are under 30, making up 40% of all generations carrying student loans. Since 2004, students under 30 have nearly doubled in number of borrowers — from 11.3 million to 17.3 million today.
The second largest group of borrowers are students in their 30s, comprising some 27% of the borrowing pool. Students in their 40s and 50s make up about 27% as well, followed by the 6% of borrowers who are 60 or older.
| Year | Under 30 | 30s | 40s | 50s | 60s |
|---|---|---|---|---|---|
| 2004 | 11.3 | 5.7 | 3.2 | 2.1 | 0.6 |
| 2006 | 12.9 | 6.7 | 3.9 | 2.8 | 0.9 |
| 2008 | 14.2 | 8.0 | 4.4 | 3.5 | 1.3 |
| 2010 | 16.2 | 9.6 | 5.3 | 4.2 | 1.7 |
| 2012 | 15.1 | 10.9 | 6.0 | 4.7 | 2.2 |
| 2014 | 17.4 | 11.8 | 6.5 | 5.0 | 2.6 |
| 2015 | 17.3 | 12.1 | 6.8 | 5.2 | 2.8 |
How are we doing paying off these student loans?
Looking at trends since 2004, you’ll see that the majority of borrowers are having trouble decreasing their student loan balances. Only about 16.7 million of the 44.2 million borrowers are able to stay on top of their loans, lowering their balances through regular repayments.
In 2015, 46% of borrowers had the same or higher balance than the previous quarter due to accumulated interest. Ten percent of students defaulted on their loans in 2015, and since 2004 the number of borrowers in default has quadrupled. Against these figures, note that the number of borrowers overall doubled from 2004 to 2015.
| Year | Current balance lower than previous quarter | Current balance same or higher than previous quarter | 90+ days overdue | Default | Total # of borrowers |
|---|---|---|---|---|---|
| 2004 | 8.7 | 12.0 | 1.0 | 1.1 | 22.9 |
| 2006 | 10.3 | 14.0 | 1.3 | 1.7 | 27.3 |
| 2008 | 12.5 | 15.0 | 1.6 | 2.3 | 31.4 |
| 2010 | 14.1 | 18.0 | 2.0 | 3.0 | 37.0 |
| 2012 | 15.2 | 17.0 | 2.6 | 4.1 | 38.9 |
| 2014 | 16.4 | 19.9 | 2.4 | 4.6 | 44.3 |
| 2015 | 16.7 | 20.4 | 2.4 | 4.7 | 44.2 |
Number of borrowers in millions.
How to pay off student loans
Don’t sacrifice your financial future when paying for your education. Stay on top of your student loans and avoid unnecessary interest by paying your loan installments by their due dates. Responsible repayments can ultimately improve your credit score: They let lenders know that you’re a trustworthy, less risky borrower when you’re in the market for a future car or home. Use these tips to take charge of your student loans:
- Consolidate multiple federal loans.
- Refinance your loans at a lower interest rate.
- Get ahead by paying interest on your loan while you’re still in school.
- Set up an automatic withdrawals to avoid late fees and penalties.
Ways your employer can help pay off your student debt
The ever rising national student debt currently sits at over $1.4 trillion as of Q2 2017, according to the Federal Reserve. There are over 44 million Americans carrying a student loan debt. Of those, the average graduate owes $38,000.
With over 7 million of the U.S. population having defaulted on their student loans, recent graduates are desperate to land themselves in a high paying job in order to start paying off their student loans. However, a higher income is not the only way you can accelerate the speed at which you pay off your student loan.
Public Service Loan Forgiveness
Opting to work for the government or specific nonprofit organizations can result in your federal student debt (95% of total student debt according to Federal Student Aid) being forgiven after 10 years if you meet the right conditions.
After you have made 120 qualifying monthly payments under a qualifying repayment plan – while working full-time for a qualifying employer – the Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans.
Although the program is only applicable on Direct Federal Loans, and not on Federal Family Education Loans or Perkins Loans, they can still be forgiven if consolidated into a Direct Federal loan.
Qualifying monthly payments:
- After October 1, 2007;
- Under a qualifying repayment plan;
- For the full amount due as shown on your bill;
- No later than 15 days after your due date; and
- While you are employed full-time by a qualifying employer
Qualifying repayment plan:
Any income-driven repayment plans (plans where your monthly payment is based on your income)
Qualifying employer:
- Government organisations (federal, state, local or tribal)
- Not-for-profit organisations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other not-for-profit organisations whose primary purpose is to provide certain types of qualifying public services
Qualifying federal student loan:
Any non-defaulted loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program.
Case study: with PSLF Program vs. without PSLF Program
| Public Service Loan Forgiveness (PSLF) Program | Without Public Service Loan Forgiveness (PSLF) Program | |
|---|---|---|
| State | New Hampshire | New Hampshire |
| Loan type | Federal Direct Unsubsidized Loan | Federal Direct Unsubsidized Loan |
| Fixed interest rate for Direct Loans | 4.45% | 4.45% |
| Loan amount | $38,000 | $38,000 |
| Loan term (months) | 120 | 132 |
| Weighted average income of people with at least some college credits | $54,000 | $54,000 |
| Repayment plan | PAYE | PAYE |
| Total amount paid | $43,878 | $48,532 |
Potential amount saved: $4,654 – that’s 12% of your original loan of $38,000
Potential time saved: 12 months
Employer-provided student loan repayment assistance
The availability of qualified graduates to the workforce is something that will benefit many companies who are looking for quality individuals to join their team. So it makes sense that companies would be willing to offer incentives to potential graduate employees that will assist them in paying off their student loans.
A poll of 3,227 HR professionals by SHRM found that 4% of employers are offering employer-provided student loan repayment assistance. Finding the right employer can help you reduce the amount of time needed to pay off a student loan significantly. The downside is that these payments are not exempt from payroll or income tax.
Companies such as Aetna, Fidelity, Natixis Global Asset Management and PWC offer their employees a lifetime maximum of $10,000 towards their student loans. Nvidia even offers a maximum of $30,000 – that’s potentially 79% of your original $38,000 loan! Other companies will offer a certain capped amount each year until the loan is paid off.
Volunteering your time (not technically “employer”)
Organisations such as SponsorChange offer direct student loan payments in exchange for volunteers who complete skill-based projects. While volunteer work isn’t technically ‘employment’, this is another avenue through which choosing the right place to devote your time and services can result in money being directed straight towards reducing your student loan. Plus, volunteer work will look great on your resume. In addition to doing something positive for the community, you are also paying off your student debt in the process.
For all media inquiries, please contact
Jennifer McDermott
US Communications Manager
& Consumer Advocate
M: +1 (347) 276 6617
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