Savanna Hoffman
Student loan debt is a national crisis in the United States, with 51% of college undergraduates finishing college with student loan debt. The average college student borrows $29,400 in loans to pay for their degrees. Millennials have a lower net worth than previous generations and student loan debt has been identified as a significant contributing factor. This generation owes 6.99% more than the national average, with an average debt of $40,614. While Gen Z has the lowest average debt balance, rising education costs mean they are starting out with more debt than millennials did.
| Characteristics | Values |
|---|---|
| Average student loan debt | $40,614 |
| Average monthly payment | $250 |
| Average student loan debt balance compared to nationwide average | 6.99% higher |
| Average amount owed compared to the average indebted student borrower | $2,641 more |
| Share of borrowers with loan payments less than $200 | 47% |
| Share of borrowers with loan balances over $50,000 | 7.1% |
| Generation with the largest share of student loans | Millennials |
| Number of millennials owing between $20,000 and $40,000 | 3.87 million |
| Average college student loan amount | $29,400 |
| Average annual reduction in student loan debt | 4.40% |
| Average debt balance of Gen Z | $22,948 |
| Share of Gen Z with student loan debt | 36% |
| Share of Gen Z with loan balances over $50,000 | 7.8% |
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What You'll Learn
Millennial student loan debt averages $40,614
Millennials, born between 1981 and 1996, have the largest share of total student loan debt, with an average debt of $40,614. This is despite a declining average balance, which has reduced by 4.40% annually in the 2020s—a larger percentile reduction than any other generation. This reduction may be due to the fact that 47% of Millennial student borrowers have loan payments of less than $200. However, 20% of Millennials with student loan debt have payments over $500, and 83% have put off major investments, such as buying a home or starting a business.
Millennials were often told that to succeed in life, they needed a college education. As a result, a larger percentage of Millennials have student loan debt than any other generation. However, it is important to note that college graduates do tend to earn more on average than non-graduates, and those with a degree are more able to pay back loans.
While Gen Z has the lowest average debt balance, rising education costs mean that Gen Z starts out with more debt early on than Millennials did. Gen Z's average debt is also the fastest-growing, with a 6.72% compound annual growth rate.
Overall, the high cost of college has been one of the key financial obstacles for Millennials, and many are hoping for student debt relief.
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Millennial student debt impacts long-term financial goals
Millennials are facing a student debt crisis that is impacting their long-term financial goals. With the average student loan debt in the United States continuing to rise, millennials are the generation with the largest share of student loans, and their debt balances are higher than the nationwide average. This has resulted in a lower net worth for millennials compared to previous generations, hindering their ability to achieve financial milestones such as buying a home or saving for retirement.
The average millennial with student debt owes approximately $40,614, with 47% of borrowers making monthly payments of less than $200. This substantial financial burden, coupled with slow wage growth and rising living costs, leaves little room for long-term savings. As a result, millennials are struggling to build wealth and secure their financial future.
While Gen Z now faces higher education costs, a larger percentage of millennials carry student loan debt. This debt load impacts their monthly budgets and overall financial stability. The pressure to succeed and the notion that a college education is a necessity have contributed to the high number of millennial student borrowers. However, the reality of slow wage growth and increasing living expenses has made it challenging for this generation to keep up with their loan repayments while also saving for the future.
Student loan debt is a critical issue that affects millions of Americans, and it has particularly severe consequences for millennials striving to achieve financial security. The debt burden carried by this generation is a significant obstacle to their long-term financial aspirations, highlighting the urgent need for effective solutions to address the student debt crisis.
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Millennial student debt average is 6.99% higher than the national average
Millennials have an average student loan debt balance of 6.99% higher than the nationwide average. The average millennial owes $2,641 more than the average indebted student borrower, with 47% of millennial student borrowers having loan payments of less than $200. This is largely due to the significant rise in college costs during millennials' lifetimes, with the net price of tuition, fees, and room and board at a public four-year college increasing by 68% since the 1999-2000 academic year. The annual amount borrowed for higher education has also doubled in that time.
The high cost of college has had a significant impact on millennials, with 83% of millennials with student loan debt putting off major investments such as buying a home or starting a business. Additionally, 72% of millennials have made employment decisions based on their student loan debt, and 42% have chosen not to pursue further education. While Generation Z has a lower average debt balance, they represent the second-largest generational segment of student borrowers, and their debt is increasing at a faster rate than previous generations due to rising education costs.
Millennials have been reducing their student loan debt at a faster rate than other generations, with a 4.40% compound annual reduction in the 2020s. This may be due to the negative perception of debt among millennials, with 57% believing that student debt is the largest source of consumer debt. Despite this, the high cost of college and the resulting debt have had a significant impact on the financial decisions and opportunities of millennials.
The student debt crisis is a complex issue, with nuances in how debt affects borrowers. While college costs and debt are legitimate concerns, the impact on individuals varies depending on demographics and other factors. The increase in college costs has particularly affected millennials, contributing to their higher average student loan debt compared to other generations. Addressing the root causes of student debt and the disparities between generations is crucial to ensuring that future generations can access higher education without taking on excessive debt.
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Millennial student debt average monthly payment is $250
Millennials are facing a decline in their net worth, and student loan debt is a significant contributing factor. While data on the amount of student loan debt owed by each Millennial varies, the consensus median is around $25,000-$30,000 per borrower, with an average monthly payment of $250. This figure can represent a significant proportion of a borrower's post-tax salary, leaving little room for long-term savings or investments.
Among student borrowers with outstanding loans, 47% of Millennials make payments of less than $200 per month, while 20% have payments exceeding $500. This debt load often influences their financial decisions and employment choices, impacting their ability to pursue further education, buy a home, or start a business.
Millennials have an average student loan debt balance 6.99% higher than the nationwide average, with the average Millennial owing $2,641 more than the average indebted student borrower. This disparity is attributed to rising education costs, with Millennials taking on more debt to finance their college education.
Compared to previous generations, Millennials face unique financial challenges. The combination of student loan debt, slow wage growth, and increasing living costs hinders their ability to accumulate wealth and achieve long-term financial goals. As a result, Millennials are strategically minimizing the impact of student loan debt through various means, such as prioritizing trades or other career paths that do not require a college degree.
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Millennial student debt average reduction is 4.40%
Millennials have been able to reduce their student loan debt balance by a larger percentage (4.40% compound annual reduction) than any other generation in the 2020s. The average student loan debt balance among millennials is $40,438, down from $46,281 in 2021. This is a decline of 6.99% compared to the nationwide average. The average millennial owes $2,641 more than the average indebted student borrower. 47% of millennial student borrowers have loan payments of less than $200, while 20% have payments over $500.
While Gen Z has the lowest average debt balance ($22,948 in 2024), they represent the second-largest generational segment, with 28.2% of student borrowers belonging to this generation. Gen Z is less likely to have student loan debt, but rising education costs mean they start with more debt early on than millennials did, even after adjusting for inflation. As of June 2022, 25.7% of older millennials and 40% of older Gen Zers had a total student loan balance of $10,000 or less.
Student debt is a burden for many millennials, with 83% of those with student loan debt putting off major investments, such as buying a home or starting a business. Additionally, 72% of millennials have made employment decisions based on their student loan debt, and 42% have chosen not to pursue further education due to this financial burden.
The high cost of tuition and other expenses associated with higher education is a significant contributor to the student debt crisis. While some debt relief programs are available, such as the Biden Administration's proposed debt forgiveness, they may not be enough to address the widespread impact of student debt on millennials and Gen Zers.
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Frequently asked questions
Millennials have an average student loan debt balance 6.99% higher than the nationwide average. The average Millennial owes $2,641 more than the average indebted student borrower. Almost half of millennials have student loan debt, and on average, they are $40,614 in debt. 3.87 million millennials owe between $20,000 and $40,000.
Gen Z has the lowest average debt balance of $22,948. However, rising education costs mean Gen Z starts with more debt early on than millennials did. A similar share of Gen Z (7.8%) and millennials (7.1%) borrowers had large student loan balances of over $50,000.
Student debt is preventing millennials from accumulating wealth compared to previous generations. The debt often leaves little room for long-term savings for retirement or a home down payment. Student loans are the second-largest type of consumer-generated debt, accounting for 9% of the nation's consumer debt.
