Student Loan Debt Statistics that Explain the Crisis

Did you know student loans are the second-largest cause of U.S. consumer debt, behind only mortgages? Yes, a huge number of young Americans have been forced to put their lives on hold due to crippling loan repayments.

Bearing in mind that college graduates have a much better chance on the labor market than people with lower levels of education and that manual jobs are rapidly disappearing due to advances in technology, it's no wonder more Americans go to college than ever before.

This is one key reason why students and their families are increasingly indebted. Tuition fees are skyrocketing and the average student debt is keeping pace. A dizzying number of people are struggling to cover even the most basic expenses.

Key College Debt Statistics for 2024 - Editor’s Choice

• The typical repayment amount for student loans is around $400 per month, or $4,800 per year. 
• The average student walks away from college with almost $40,000 in debt. 
• Total U.S. student loan debt now exceeds $1.56 trillion.
• A total of 44.7 million people had borrowed money to pay for their studies. 
• Student loans are the second-largest source of average American debt.

Total US student loan debt amounts to more than $1.56 trillion.

(The Federal Reserve System; MeasureOne Private Student Loan Report; U.S. Student Loan Center)

This amount includes an estimated $119.31 billion in student loans from private sources that aren’t backed by the federal government. The US Student Loan Center argues that the country is facing a serious student loan crisis, since both private and federal student loan debt is at an all-time high. 

Student loan debt is the second-highest category of US debt among consumers, right after mortgages.

(NY Times; Federal Reserve Bank of New York)

Borrowing money to fund education constitutes a significant portion of current US debt among consumers. Americans now borrow more to finance their schooling than they do in auto loans and credit cards. 

The average US student loan debt has grown by more than 500% from 1999 to 2015.

(HuffPost; NCES)

Unfortunately, average salaries haven’t followed this rapid growth. From 2000 to 2017, the inflation-adjusted median earnings of people with a bachelor’s degree declined by 9%.

More American citizens have a student loan debt than the total population of most countries.

(HuffPost)

The total US population holding a college student debt is bigger than the entire population of countries such as Canada, Poland, Australia, and Sweden.

The average student walks away from college with almost $40,000 in debt.

(Accounting Principals)

This is nearly equal to their first year’s salary, as 65% of graduates earn $45,000 or less per year year at their first post-graduation gigs. When you take into account accumulated interest and other expenses, it can take years to pay off such a debt.

Two in three graduates (65%) at public and non-profit colleges had a student loan debt in 2017.

(The Institute for College Access & Success)

These graduates owed an average of $28,650, which is a 1% increase compared to the previous year.

A total of 44.7 million people had borrowed money to pay for their studies.

(Federal Reserve Bank of New York; Federal Student Aid)

Defaulted student loans were worth as much as $113.3 billion in total as of Q4 2018. 

Around nine in 10 students use college loans to cover the expenses of attending private, for-profit colleges.

(VOA)

Students at for-profit colleges have lower earnings and higher debt. It’s more likely that they will have a harder time paying back the loans.  

Students in fields like auto repair and dental assisting earn more if they get their certificates from community colleges and other public institutions than those who attend private, for-profit schools - especially online schools and multiple-campus chains.

(VOA)

A report by the National Bureau of Economic Research showed that people who attended public colleges earned approximately $1,500 more per year than they did before they started their studies. In contrast, students who attended for-profit colleges earned $920 less on a yearly basis compared to before they started their studies.

Almost half of borrowers (48%) who attended private for-profit colleges start to repay their loans at default rates within 12 years.

(The Institute for College Access & Success)

This is the case with only 12% of public college students and 14% of non-profit private college attendees.

Back in 2012, 39% of recent graduates didn’t have any college student debt.

(Accounting Principals)

According to a poll of 507 grads conducted in May of that year, 49% of graduates didn’t have any debt other than student loans.

In 2013, the federal government made about $50 billion on student loans.

(USA Today)

During that fiscal year, the U.S. government generated more money from student loans than companies such as ExxonMobil, Apple, and JPMorgan Chase made in 2012. 

Tuition Facts

The average cost of in-state tuition at public universities is about $9,410 per year, while that number skyrockets to $32,410 annually for private colleges.

(Debt.org)

Most American students who don’t have access to scholarships and grants need to get student loans to pay for their college degrees. Even some of those who do have access to college funding need additional finances to cover living costs, books, and fees.

Tuition costs have risen by 344% at public universities and by 241% at private colleges by since 1980.

(Debt.org)

Higher education fees are among the fastest-rising costs in the United States. To put this into perspective, food and electricity costs have risen about 150% over the same time period. 

The Most Indebted Students by Profession

College loan debt is among the highest for medical students. The median debt for medical graduates was $194,000 in 2018.

(AAMC)

Medical student loan data sounds even more alarming when we consider the fact that 71% of such students graduate with debt.

According to a survey by the American Dental Education Association (ADEA), the average college debt of dental graduates reached $285,184 in 2018.

(American Dental Education Association)

Although dental school graduates have a good reputation for making their repayments, the survey concluded that such a high level of debt can jeopardize a new dentist’s career.

Law students are also highly indebted. For example, the average student loan debt of graduates at Southwestern Law School in Los Angeles is $212,576.

(U.S. News)

That’s the highest average amount of student loan debt among law graduates in the U.S., with 82% of Southwestern Law School grads indebted. Another illustration of high indebtedness in law schools is Southern University Law Center in Baton Rouge, LA. There, 100% of grads are indebted, with an average debt of $94,447. 

Repayment Struggle in Numbers

The typical repayment amount for students’ loans is around $400 per month, or $4,800 per year.

(CBS News; CollegeInColorado.org)

An average student loan payment is $280 per month for a loan of $25,000, assuming that the interest rate is 6.8% and the repayment takes 10 years.  

Almost 50,000 applications for public service student loan forgiveness had been submitted as of Q4 2018.

(Forbes)

Of that number, 99.5% applications were denied. There’s a number of reasons why some college students can’t qualify for the program; many don’t have eligible student loans or employment, while others haven’t made the required number of payments.

Student loans have the highest delinquency rate at a national level.

(Federal Reserve of New York; Credit Sesame)

As of Q4 2018, 11.4% of aggregate US student loan debt was at least 90 days delinquent or in default. This is higher than the percentage for credit cards, auto loans, and mortgages. 

41% of U.S. families with the lowest quarter of incomes are repaying student loans at default rates.

(Credible.com)

The same goes for 28.2% of families with lower-middle incomes, 22.1% of families with upper-middle incomes, and 13.6% among the wealthiest quarter of U.S. families. 

According to a recent survey, 31% of young millennials don’t move out of their parents’ homes and delay important life milestones because of their current student loan debt.

(Ameritrade)

In total, 47% of students delay buying a home, 21% don’t get married, 21% delay having children, and 40% give up on saving for retirement because of their debt. 

Federal vs. Private Student Loans

As of Q1 2019, there were 18.6 million borrowers repaying a federal student loan debt.

(Federal Student Aid; Forbes)

Around 11 million borrowers are in student loan deferment, forbearance, or default. 

In Q3 2018, private college debt accounted for 7.63% of the total student loan debt in the U.S.A.

(MeasureOne)

The American student loan market consists of two main components: federal student loans and private student loans.

The student loan default rate at public colleges and universities is 10.3%, while at proprietary schools this number is 15.6%.

(U.S. Department of Education; Credible.com)

The overall default rate for students who have just graduated or left college is 10.8%. Private not-for-profit educational institutions have the lowest default rate: 7.1%. 

The early-stage (30-89 days overdue) and late-stage (90 or more days overdue) delinquency rates for private student loans are 2.73% and 1.75%, respectively.

(MeasureOne)

It seems students and their families have started to use private student loans more responsibly. Both metrics, as well as the charge-off rate, are significantly lower than they were five years ago. 

There are a dozen federally approved student loan servicers in the U.S.

(Federal Student Aid; The College Investor; Bank of America) 

Authorities like Navient, CornerStone, FedLoan Servicing, MOHELA, and OSLA student loans services collect payments and provide college students with assistance and information about loan repayments, deferment, and forbearance. Bank of America student loans were available up until recently. However, the bank no longer accepts applications for Stafford or PLUS loans, which are now issued exclusively through the U.S. Department of Education Direct Loans Program.

At the time of writing, the interest rate for Stafford loans (a type of national student loan intended for undergraduates) is 5.05%.

(The Institute For College Access and Success; studentloanhero.com)

Direct federal loans, also known as Stafford loans, can be unsubsidized or subsidized. In the latter case, the Department of Education covers the interest for students who attend college at least half-time. The percentage above refers both to unsubsidized and subsidized undergraduate student loans. Graduate students are only eligible for unsubsidized Stafford loans, which have an interest rate of 6.60% at the time of writing.

The interest rate for PLUS loans issued in 2018/19 is 7.60%.

(The Institute For College Access and Success)

There are two types of PLUS student loans. Parent PLUS loans are intended for students’ parents, who then become responsible for paying back the loan, including interest. Grad PLUS loans, on the other hand, are designed for graduate and professional degree students. 

When it comes to the cost of debt accrued by private student loans, interest rates reached as high as 14.24% in April 2019.

(The Institute For College Access and Success)

What’s even worse is that private college loans do not have student debt relief, deferment, or forgiveness options, all of which come with federal student loans.

15.2 million Americans aged 25-34 have a federal student loan debt. Combined, this debt is worth $494.2 billion.

(Federal Student Aid)

Interestingly, 1.9 million Americans aged 62 or over owe a total of $67.8 billion in student loans. The 14.1 million borrowers aged 35 to 49 have an outstanding student loan debt of $548.4 billion, while the 8.4 million borrowers who are 24 or younger owe a total amount of $120.1 billion.

More than 50% of American students do not take full advantage of federal student loans.

(The Institute For College Access and Success)

Instead of relying on federal student loan debt, which has some in-built protections, these students take out private loans with substantially higher interest rates.

In the 2015-16 season, 72% of all undergraduates claimed some type of financial aid.

(NCES)

Statistics show 38% of students took out college loans, 63% received grants, 5% received aid via work-study programs, and 4% had parents who took out Direct PLUS loans. The average amount received was $12,300.

During the same season, 39% received Pell Grants (federal subsidies for financially disadvantaged students) and 36% took out federal direct loans.

(NCES)

Students who were eligible for Pell Grants received an average amount of $3,700, while borrowers took an average of $3,700 in direct subsidized loans, $4,000 in direct unsubsidized loans, and $6,600 in direct federal loans.  

Demography and Student Debt by State

Recent male graduates have 28% more student loan debt ($30,508) than women who have recently graduated ($23,892).

(Accounting Principals)

Recent male graduates also have more than twice as much non-student debt, such as credit card-related debt or auto loan debt. For male graduates, this number is $17,858, compared to $8,574 for recent female graduates.

First-generation students are more likely to end up repaying loans at default rates than students whose parents attended college.

(The Institute For College Access and Success)

23% of such students default on their federal student loans within 12 years. In contrast, only 14% of non-first-generation students defaulted during the same time period.

African-American students are more likely to repay their loans at default rates than other races or ethnicities.

(The Institute For College Access and Success)

Almost four in 10 African-American students (38%) defaulted within 12 years. 

The student debt crisis is worse in New Hampshire than in any other US state. Almost 75% of graduates in this state have outstanding student loan debt, owing an average of $36,367.

(CNBC; The Institute for College Access and Success)

Other states facing a student loan debt crisis are Pennsylvania, Connecticut, Delaware, Minnesota, and Massachusetts. In those states, fresh graduates leave with an average debt of $31,500.

The U.S. states with the lowest average student loan debt in 2018 are Utah ($19,975), New Mexico ($21,373), and California ($22,744).

(Forbes)

They are followed by Arizona ($23,447) and Nevada ($24,128).

When it comes to aggregate student loan debt, California, Florida, and Texas are leading the way.

(Forbes)

Students residing in California, Florida, Texas, and New York owe over $340 billion combined. They actually represent more than 20% of all student debt in the U.S.