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Are you or a loved one preparing to pursue a college degree? Whether you are a student planning to gain knowledge in a certain field or a parent budgeting for your child’s higher education, understanding your monetary responsibility is absolutely imperative. As the need for undergraduate degrees becomes more prevalent, so does the financial burden on those pursuing it.
Student loan debt is currently the highest it has ever been. According to the Institute for College Access & Success, two out of every three graduating seniors in 2018 had student loans and the average debt was $29,200. This is an increase from the previous year, which saw an average student loan debt of $28,650. This is a significant shift, especially as the cost of college continues to increase and considering the demand for highly educated employees in the workforce.
Bachelor degree graduates are generally better prepared to attain higher paying employment, but even these individuals often find it difficult to repay student debt. Graduates from certain groups in particular such as minority, low-income, and first generation students are more likely to default on their loans. With proper college planning, incoming students may be able to offset some financial responsibility with alternative forms of aid. While student loans may still be necessary, scholarships, grants, and work study can help individuals graduate with less debt overall.
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The Increase of Tuition Costs
The cost of earning a four-year, undergraduate degree has increased drastically over the years. According to the National Center for Education Statistics, the average inflated tuition for all college and university types was $5,504 in the 1985-86 academic year. The average tuition for the 2016-17 academic year was a staggering $26,593. While students can pay less by attending public institutions in their state of residency, the total amount due was still nearly $20,000 for a single year.
As tuition rates increase year after year, so do student loan balances. More and more students are forced to request additional loans to complete their educations, but do not receive increased salaries to match. This means recent graduates are likely to pay more interest over time and stay in debt longer.
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Number of Student Loan Borrowers by Age
Millions of Borrowers
| Year | under 30 | 30-39 | 40-49 | 50-59 | 60+ |
|---|---|---|---|---|---|
| 2004 | 11.3 | 5.7 | 3.2 | 2.1 | 0.6 |
| 2005 | 12.1 | 6.1 | 3.5 | 2.4 | 0.7 |
| 2006 | 12.9 | 6.7 | 3.9 | 2.8 | 0.9 |
| 2007 | 13.4 | 7.2 | 4.1 | 3.1 | 1.1 |
| 2008 | 14.2 | 8.0 | 4.4 | 3.5 | 1.3 |
| 2009 | 15.3 | 8.8 | 4.8 | 3.8 | 1.5 |
| 2010 | 16.2 | 9.6 | 5.3 | 4.2 | 1.7 |
| 2011 | 15.5 | 9.8 | 5.5 | 4.3 | 1.9 |
| 2012 | 15.1 | 10.9 | 6.0 | 4.7 | 2.2 |
| 2013 | 17.4 | 11.4 | 6.2 | 4.9 | 2.4 |
| 2014 | 17.4 | 11.8 | 6.5 | 5.0 | 2.6 |
| 2015 | 17.3 | 12.1 | 6.8 | 5.2 | 2.8 |
| 2016 | 17.1 | 12.2 | 7.0 | 5.2 | 3.0 |
| 2017 | 16.8 | 12.3 | 7.3 | 5.2 | 3.2 |
Total Student Debt Loan Balance
The total amount of student debt in the United States is substantial. According to Federal Student Aid, an official organization of the United States government, there were over $1.5 trillion dollars of outstanding student loan debt in 2019. The loans measured in these statistics include Direct Loans, Federal Family Education Loans, and Perkins Loans, with Direct Loans having the highest outstanding balance. This debt is spread between 42.9 million unduplicated recipients. It is worth noting that the 2019 total is up significantly from 2016, when the total student loan debt was $1.29 trillion.
It is also important to realize that there are several different types of student loans: Stafford, Grad PLUS, Parent PLUS, Perkins, and Consolidation. Stafford loans may be subsidized or unsubsidized. The federal government pays interest on subsidized loans during select periods (namely when you are still in school and for a grace period afterwards), but not for unsubsidized loans. It is, however, generally easier to receive unsubsidized loans for just this reason.
In 2019, the combined amount of Stafford loan debt was $796.7 billion, with $516 billion unsubsidized.
Total Student Loan Balances by Year
Billions of Dollars
| 2004 | $345 Billion |
|---|---|
| 2005 | $391 Billion |
| 2006 | $481 Billion |
| 2007 | $547 Billion |
| 2008 | $639 Billion |
| 2009 | $721 Billion |
| 2010 | $811 Billion |
| 2011 | $873 Billion |
| 2012 | $965 Billion |
| 2013 | $1.079 Trillion |
| 2014 | $1.155 Trillion |
| 2015 | $1.231 Trillion |
| 2016 | $1.316 Traillion |
| 2017 | $1.386 Trillion |
Average Debt for College Graduates by State
Total student loan debt varies significantly based on the type of degree sought. According to the Pew Research Center, the median amount of outstanding debt for a graduate with a postgraduate degree is $45,000, while those seeking associate degrees or certificates have a median debt of only $10,000. Bachelor’s degree graduates fall in the middle, with a median loan debt of $25,000.
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Student loan debt also varies by state. Students graduating from colleges and universities in South Carolina, for example, had an average debt of $30,838 after the 2017-18 academic year. Those graduating from Washington state, only had an average debt of $23,524. The states with the highest average graduate debt include Connecticut, Pennsylvania, New Hampshire, Rhode Island, and New Jersey. Connecticut tops the list with an average debt of $38,669. The lowest recorded average graduate debt was $19,728 in Utah.
Debt by State
| State | Average Debt of Graduates (2017-18) | Average Debt Rank | Percent of Graduates with Debt (2017-18) |
|---|---|---|---|
| Alabama | $29,469 | 23 | 51% |
| Alaska | NA | NA | NA |
| Arizona | NA | NA | NA |
| Arkansas | 26,579 | 37 | 53% |
| California | $22,585 | 46 | 49% |
| Colorado | $24,888 | 40 | 52% |
| Connecticut | $38,669 | 1 | 59% |
| Delaware | $34,144 | 6 | 62% |
| District of Columbia | $34,046 | 7 | 51% |
| Florida | $24,428 | 42 | 44% |
| Georgia | $28,824 | 27 | 57% |
| Hawaii | $24,162 | 43 | 47% |
| Idaho | $27,682 | 31 | 62% |
| Illinois | $29,855 | 22 | 66% |
| Indiana | $29,064 | 26 | 57% |
| Iowa | $30,045 | 20 | 63% |
| Kansas | $26,764 | 35 | 58% |
| Kentucky | $28,435 | 29 | 64% |
| Louisiana | $27,151 | 33 | 49% |
| Maine | $32,676 | 8 | 61 |
| Maryland | $29,178 | 25 | 55% |
| Massachusetts | $31,882 | 12 | 57% |
| Michigan | $32,158 | 10 | 59% |
| Minnesota | $32,317 | 9 | 68% |
| Mississippi | $30,117 | 19 | 58 |
| Missouri | $29,224 | 24 | 58% |
| Montana | $28,032 | 30 | 57% |
| Nebraska | $26,422 | 38 | 55% |
| Nevada | $22,600 | 45 | 51% |
| New Hampshire | $36,776 | 3 | 76% |
| New Jersey | $34,387 | 5 | 64% |
| New Mexico | $21,858 | 47 | 49% |
| New York | $31,127 | 15 | 59% |
| North Carolina | $26,683 | 36 | 56% |
| North Dakota | NA | NA | NA |
| Ohio | $30,323 | 18 | 60% |
| Oklahoma | $25,221 | 39 | 47% |
| Oregon | $28,628 | 28 | 55% |
| Pennsylvania | $37,061 | 2 | 65% |
| Rhode Island | $36,036 | 4 | 63% |
| South Carolina | $30,838 | 16 | 58% |
| South Dakota | $31,895 | 11 | 72% |
| Tennessee | $26,838 | 34 | 55% |
| Texas | $27,293 | 32 | 56% |
| Utah | $19,728 | 48 | 36% |
| Vermont | $31,431 | 14 | 63% |
| Virginia | $30,363 | 17 | 57% |
| Washington | $23,524 | 44 | 48% |
| West Virginia | $30,014 | 21 | 65% |
| Wisconsin | $31,705 | 13 | 64% |
| Wyoming | $24,474 | 41 | 46% |
Student Loan Debt Balances by Age
Student loan debt plagues people of all ages. According to the Pew Research Center, 15% of all adults say they currently have outstanding student loan debt. About one-third of individuals ages 18 to 29 are paying off their education - whether they graduated or not. In 2019, 15 million borrowers, ages 25 to 34, were responsible for a total of $501.5 billion in outstanding debt, accounting for nearly half of the total. Those ages 35 to 49 had $575.5 billion in debt.
Because many are able to pay down their loans over time, the number of people with student debt does decrease in higher age brackets. It is worth noting, however, that 2.1 million individuals 62 years of age and older still had $75.9 billion in outstanding debt in 2019.
Student Loan Balances by Age Groups
Billions of Dollars
| Year | under 30 | 30-39 | 40-49 | 50-59 | 60+ |
|---|---|---|---|---|---|
| 2004 | 147.8 | 112.3 | 48.7 | 29.5 | 6.3 |
| 2005 | 162.4 | 127.6 | 56.4 | 36.4 | 8.2 |
| 2006 | 196.3 | 154.8 | 69.8 | 48.2 | 12.2 |
| 2007 | 219.8 | 174.5 | 80.0 | 56.4 | 15.9 |
| 2008 | 250.9 | 205.4 | 94.4 | 67.6 | 20.4 |
| 2009 | 275.9 | 232.2 | 109.0 | 78.5 | 25.3 |
| 2010 | 301.2 | 261.2 | 128.5 | 89.6 | 30.8 |
| 2011 | 316.4 | 282.0 | 141.7 | 97.0 | 35.4 |
| 2012 | 322.7 | 320.2 | 167.3 | 111.3 | 43.0 |
| 2013 | 362.0 | 354.1 | 188.1 | 124.9 | 49.8 |
| 2014 | 370.5 | 383.1 | 207.6 | 136.5 | 57.7 |
| 2015 | 376.4 | 408.4 | 229.6 | 149.7 | 66.7 |
| 2016 | 383.2 | 437.4 | 255.6 | 163.2 | 76.3 |
| 2017 | 383.8 | 461.0 | 278.9 | 177.2 | 85.4 |
Private vs. Public Loan Debt
Total student loan debt also varies based on the type of college or university attended. While proprietary and foreign schools are available, the most common degree sources are public and private institutions. Attending a private college or university tends to cost more per year, but the majority of students opt to receive a public education.
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It is important to note that debt amounts for attending both public and private institutions are steadily increasing, while the number of borrowers is remaining relatively steady. Public school students had $581.1 billion in outstanding debt in 2017, but $641.9 billion of outstanding debt in 2019. Similarly, private school students had $451.7 billion in outstanding debt in 2017 and $501.8 billion of outstanding debt in 2019.
Student Loan Debt by Loan Type
| Federal Fiscal Year Q4 | Stafford Subsidized Dollars Outstanding (in billions) | Stafford Unsubsidized Dollars Outstanding (in billions) | Stafford (Combined) Dollars Outstanding (in billions) | Grad PLUS Dollars Outstanding (in billions) | Parent PLUS Dollars Outstanding (in billions) | Perkins Dollars Outstanding (in billions) | Consolidation Dollars Outstanding (in billions) |
|---|---|---|---|---|---|---|---|
| 2014 | $258.8 | $370.8 | $629.7 | $41.2 | $65.1 | $8.2 | $385.8 |
| 2015 | $264.8 | $404.9 | $669.7 | $46.8 | $71.1 | $8.1 | $416.7 |
| 2016 | $270.1 | $436.1 | $706.2 | $53.0 | $77.8 | $7.9 | $447.3 |
| 2017 | $273.1 | $462.4 | $735.5 | $59.7 | $83.9 | $7.6 | $480.3 |
| 2018 | $277.5 | $489.6 | $767.1 | $67.0 | $89.9 | $7.1 | $508.0 |
| 2019 | $280.7 | $516.0 | $796.7 | $75.2 | $96.1 | $6.1 | $536.1 |
Student Loan Statistics by Repayment Plan
In 2019, the average student loan payment was between $200 and $299 per month. Most borrowers enroll in standard repayment plans for their student loans. This requires a minimum monthly payment, which varies depending on the loan type and amount.
It is important to realize, however, that the total amount paid each month does not go towards paying down the principle balance. A portion of the payment is for the loan interest. Interest adds up quickly, especially during deferment periods, and the total amount borrowers ultimately pay will depend on the interest rate and whether or not they are able to pay extra each month to bring their principle further down.
Paying the minimum amount can keep your payments low, but paying this alone will result in a longer repayment period. If possible, it is best to make larger payments to lower the principle balance faster.
Payment Status Debt by Age and Ethnicity
Making regular student loan debt payments can be difficult, especially for individuals who did not complete their degrees. This is likely because they lack the educational requirements necessary to attain jobs that offer high enough salaries to afford loan repayment. Two out of every 10 adults with outstanding student loans are behind on their payments. Delinquency rates are lower among borrowers with associate, undergraduate, and graduate degrees.
High debt does not necessary correspond with difficulty making payments. In fact, graduates with more debt are more likely to pay regularly and on time. This is likely because higher educational levels are generally associated with higher earning power.
Those with certain ethnic backgrounds are more susceptible to debt delinquency. Approximately 15% of Hispanic students age 18 to 29 are behind on loan payments, while only 7% of white students in the same age bracket are behind. A staggering 28% of black students age 18 to 29 are behind on their loan payments. First-generation college students are also more than twice as likely as non-first-generation college students to fall behind on payments. These discrepancies could be due to differences in rates of degree completion, wages, family support, or other factors.
The chance of delinquency seems to diminish in older populations, likely due to the establishment of more stable employment.
Direct Student Loans by Repayment Plan
| Federal Fiscal Year Q4 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | |
| Level Repayment Plan (10 Years or Less) | $183.9 | 11.08 | $188.9 | 10.95 | $197.5 | 10.99 | $196.2 | 10.83 | $200.7 | 10.76 |
| Level Repayment Plan (10 Greater than 10 Years) | $70.1 | 1.64 | $72.5 | 1.65 | $76.4 | 1.70 | $76.5 | 1.69 | $77.6 | 1.70 |
| Graduated Repayment Plan (10 Years or Less) | $60.7 | 2.43 | $70.1 | 2.71 | $77.7 | 2.89 | $84.2 | 3.03 | $90.4 | 3.12 |
| Graduated Repayment Plan (10 Greater than 10 Years) | $12.2 | 0.27 | $12.9 | 0.28 | $13.8 | 0.30 | $15.1 | 0.32 | $16.7 | 0.34 |
| Income-Contingent (ICR) | $22.1 | 0.61 | $24.0 | 0.60 | $26.8 | 0.62 | $29.9 | 0.66 | $33.6 | 0.71 |
| Income-Based (IBR) | $157.7 | 2.83 | $173.1 | 3.07 | $169.1 | 2.94 | $168.5 | 2.83 | $170.4 | 2.77 |
| Pay As You Earn (PAYE) | $30.5 | 0.77 | $46.7 | 1.02 | $61.6 | 1.14 | $78.9 | 1.27 | $96.7 | 1.39 |
| Revised Pay As You Earn (REPAYE) | NA | NA | $43.6 | 0.89 | $95.0 | 1.79 | $136.7 | 2.45 | $168.9 | 2.90 |
| Alternative | $6.1 | 0.31 | $5.6 | 0.29 | $17.5 | 0.59 | $31.8 | 0.96 | $44.9 | 1.29 |
Student Loan Debt by Delinquency Status
When a borrower is unable to make a student loan payment on time, he or she is considered delinquent. An account can be in delinquency status for a long time, during which interest is still charged. Being delinquent on student loans may also void interest rate discounts and negatively impact credit scores.
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While a borrower can remain in loan delinquency for an extended period of time, the consequences become more severe the longer it lasts. Eventually, delinquent loans will be placed into default status, which requires the debt be paid in full immediately. This also generally causes a significant credit score drop and results in higher interest rates on future loans. Additionally, the crediting agency will have the right to garnish wages, withhold tax refunds, take Social Security benefits, refuse to issues new federal student loans or grants, and even charge additional fees to cover collections and court costs until the balance is paid in full.
Federally Managed Loans by Loan Status
| Federal Fiscal Year Q4 | 2016 | 2017 | 2018 | 2019 | 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | Dollars Outstanding (in billions) | Recipients (in millions) | |
| In-School | $143.3 | 7.7 | $139.3 | 7.5 | $138.0 | 7.4 | $131.6 | 7.0 | $125.9 | 6.9 |
| Grace | $50.5 | 2.0 | $48.6 | 1.9 | $44.0 | 1.7 | $45.2 | 1.8 | $24.4 | 1.1 |
| Repayment | $523.6 | 16.9 | $587.3 | 17.7 | $661.2 | 18.8 | $719.2 | 19.3 | $761.7 | 20 |
| Deferment | $114.5 | 3.7 | $120.2 | 3.7 | $129.1 | 3.8 | $132.4 | 3.7 | $118.7 | 3.4 |
| Forbearance | $106.1 | 2.7 | $122.3 | 3.1 | $118.6 | 2.7 | $130.2 | 2.9 | $130.9 | 2.8 |
| Cumulative in Default* | $99.2 | 6.2 | $119.7 | 6.7 | $140.3 | 7.2 | $161.3 | 7.6 | $167.7 | 7.7 |
Best Types of Financial Aid
Scholarships
One of the best types of financial aid is a scholarship. Unlike loans, the money awarded through scholarships does not have to be paid back afterward. Funding amounts can range from a few hundred dollars to a full ride and is usually offered by individuals or private organizations. Scholarship applicants may be assessed on several factors including, but not limited to, academic performance, athletic ability, religious affiliation, career goals, race, or a combination of these. You can also apply for and receive multiple scholarships at a time, even with specific degree scholarship types.
Grants
Like scholarships, grants also do not need to be repaid. This type of funding is generally offered by the federal and state government, although some colleges and universities offer grants as well. Grants can be merit-based, need-based, career-specific, or student-specific. The Pell Grant, for example, is awarded to undergraduate students who demonstrate financial need. The Teacher Education Assistance for College and Higher Education (TEACH) Grant, however, only offers aid to undergraduates who plan to become teachers in high-need fields and low-income areas (and changes from a grant to a loan if you do not work in a high needs position).
Work Study
Another financial aid option is work study. Work study programs allow students to earn additional money by taking a federally funded job on campus. Jobs are filled on a first-come-first-serve basis and generally consist of work in institution student centers, career centers, and residence halls. While funds received this way are intended to assist with education-related expenses, students can use them as needed.
Accumulating student loan debt is unavoidable for many incoming students, but there are ways to limit this financial burden. Planning for college early is essential. Start by identifying all possible expenses and establishing a functional budget. Knowing the necessary fixed expenses such as rent, tuition, books, car payments, utilities, and food will provide a clearer financial picture. Students can then work toward finding ways to live within their means and avoid the accumulation of too much additional debt.
It's also a good idea to begin thinking about other means of financial aid some time before beginning the application process. Applying for scholarships and grants is imperative and can have a huge impact on future financial stability. Applications should be submitted as early as possible to ensure the highest level of positive return.