Savanna Hoffman
Millennials are facing a student debt crisis. The average student loan debt owed by millennials is $40,614, with 20% of millennials with student loan debt making payments of over $500. The rising costs of education have resulted in millennials paying more for college than previous generations, 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. This has resulted in millennials having to make employment decisions based on their student loan debt, with 83% of millennials with student loan debt putting off major investments such as buying a home or starting a business.
| Characteristics | Values |
|---|---|
| Percentage of millennials with student loan debt | 46.6% in 2022, 25.5% in 2021 |
| Average student debt for borrowers aged 25-34 | $33,000 |
| Average student debt for borrowers aged 24 and younger | $15,000 |
| Average student debt for millennials | $40,614 |
| Percentage of millennials who have put off major investments due to student debt | 83% |
| Percentage of millennials who have made employment decisions based on student debt | 72% |
| Percentage of millennials who have chosen not to pursue further education due to student debt | 42% |
| Percentage of millennials with student loan payments over $500 | 20% |
| Percentage of millennials with a college degree | 39% |
| Percentage of millennials who went to college by age 21 | 52% |
| Change in the net price of tuition, fees, room and board at a public, four-year college since the 1999-2000 academic year | +68% |
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What You'll Learn
Average student loan debt
Student loan debt is a significant issue for many millennials, who came of age during a time of transition in both the economy and the landscape of higher education. During their lifetimes, college costs have risen significantly, with the net price of tuition, fees, room, and board at a public four-year college increasing by 68% since the 1999-2000 academic year. The amount borrowed annually for higher education has also doubled during this time.
Millennials have been impacted by rising costs, leaving them with student debt. However, the amount of debt varies across the generation. In 2022, 25.5% of all millennials had student loan debt, and in 2021, 33% of millennials had student loan debt. This debt has had a significant impact on their lives, with 83% of millennials with student loan debt putting off major investments such as buying a home or starting a business, and 72% making employment decisions based on their debt. Additionally, 42% of millennials have chosen not to pursue further education due to their existing student loan debt.
The average student loan debt per borrower is estimated to be around $33,000, although this varies depending on the source and year of the data. According to one source, the average student loan debt for a bachelor's degree was $38,290 in 2023. Another source states that the average student loan debt in America is $38,883 as of January 2025. It is worth noting that private student loans, which make up about 7.6% of total student loan debt, usually charge higher interest rates than federal loans.
While student loan debt is a concern for many millennials, it is important to note that a college degree can pay off for most borrowers, even accounting for the cost, as long as they graduate. However, those who do not complete their degrees may find themselves in a greater financial crisis, as they still have to pay back their loans plus interest.
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Millennials vs Gen Z
Millennials and Gen Z are two generations that have been greatly impacted by the rising costs of higher education and student debt. While both generations face significant financial challenges, there are some key differences in the extent and impact of student debt on their lives.
Extent of Student Debt
Millennials, born between 1981 and 1993, have been dubbed the "student debt generation," with almost half of this generation carrying student loan debt. In 2019, the average student debt for millennials aged 25 to 34 was around $33,000, while those aged 24 and younger had an average debt of about $15,000. By 2022, 25.5% of all millennials had student loan debt, and they held 46.6% of total student loan debt in the US.
In comparison, Gen Z, born between 1997 and 2012, represents a smaller share of student loan borrowers. In 2023, 34% of Gen Z aged 22-24 had student loans, compared to 49% of millennials at the same age ten years earlier. Gen Z student borrowers aged 20 to 25 in 2022 had an average student loan debt of $20,900. While Gen Zers are less likely to have student loan debt, the rising education costs mean they are starting out with more debt than millennials did.
Impact on Financial Decisions
Both generations have reported that student loan debt has influenced their financial decisions and life milestones. Among millennials with student debt, 83% have put off major investments, such as buying a home or starting a business, and 72% have made employment decisions based on their debt. Similarly, 84% of Gen Z with student debt have postponed major investments, and 72% have made employment choices considering their debt.
Impact on Further Education
The burden of student debt has also impacted decisions regarding further education. Among millennials, 42% have chosen not to pursue additional education due to their existing student loan debt. In contrast, 33% of Gen Z student borrowers have made the same decision.
Repayment Progress
Millennials and Gen Z are also at different stages in their repayment journeys. Millennials have made more significant progress in reducing their student loan debt. Between 2020 and 2022, millennials achieved a 4.40% compound annual reduction in their average student loan debt balance, the largest decrease among all generations. In contrast, Gen Z, being a younger generation, is in the earlier stages of repayment, with many borrowers potentially still in school or early in their careers.
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Impact on life milestones
Student debt has a significant impact on the life milestones of millennials. As a generation that came of age during a time of transition in the economy and the higher education landscape, millennials have been greatly affected by rising costs, resulting in higher student debt. This debt has influenced their decisions about further education, employment, and major life milestones such as buying a home, getting married, and starting a family.
Millennials with student debt have shared that it affects every financial decision they make, from daily expenses to significant life choices. Many have expressed that they would start a business if not for their student debt. The burden of student loans also leads to delays in getting married, as individuals do not want their partners to take on the debt. Additionally, student debt impacts the ability to save for the future or for emergencies, affecting overall financial stability.
In terms of numbers, 83% of millennials with student loan debt have postponed significant investments, such as purchasing a home or launching a business. Furthermore, 72% of millennials have made employment decisions based on their student loan debt. The debt has also influenced their pursuit of further education, with 42% of millennials choosing not to pursue additional degrees due to financial concerns.
The average student debt for millennial borrowers aged 25 to 34 was around $33,000 per borrower in the second quarter of the 2019 fiscal year. This substantial debt burden has contributed to a "student debt crisis," with concerns about college costs and debt legitimacy. The rising costs of college, coupled with the transition in the economy, have uniquely impacted millennials, resulting in delays or sacrifices in various life milestones.
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Rising costs
Millennials are significantly impacted by rising costs, which have left many with student debt. This impact varies across the generation, with older millennials being more likely to have attended college and hold a bachelor's degree by their late 30s compared to Gen Xers.
The rising costs of education have resulted in millennials taking on substantial student debt. As of Q2 of the 2019 fiscal year, borrowers aged 25 to 34—a significant share of the Millennial population—held $497.6 billion in outstanding student loan debt, with an average debt of around $33,000 per borrower. This has had a significant impact on millennials' financial decisions, with 83% putting off major investments, such as buying a home or starting a business, and 72% making employment decisions based on their student loan debt. Additionally, 42% of millennials have chosen not to pursue further education due to their existing student debt.
The rising costs of college have had a significant impact on millennials, as they came of age during a time of transition in both the economy and higher education. The net price of tuition, fees, room, and board at a public four-year college increased by 68% since the 1999-2000 academic year, and the amount borrowed annually for higher education has doubled. This has resulted in millennials taking on more debt to finance their education, with many entering the workforce during a weak economy, making it difficult to repay their loans.
The rising costs of student loans have also been impacted by policy decisions. The proposed House Republican plan, for example, would increase monthly payments for borrowers, potentially leading to unaffordable payments and a spike in loan defaults. Additionally, the new loan limits for graduate students may lead to increased private borrowing, as the value of federal loans will decrease over time due to a lack of adjustments for inflation. These factors contribute to the rising costs of student loans, impacting millennials' ability to repay their debt.
Furthermore, the income-driven repayment (IDR) system, created in the early 1990s, aimed to help borrowers afford their monthly payments. However, private loans, which are becoming more common, do not offer the same protections as federal loans, making it easier for borrowers to fall behind. The lack of protections and eligibility for forgiveness or relief options further contribute to the financial burden faced by millennials with student debt.
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Debt repayment options
Millennials are disproportionately affected by student debt compared to other generations. A larger percentage of millennials have student loan debt, and they have reduced their debt balance by a greater percentage than any other generation in the 2020s.
Student loan debt has become a pressing issue for many millennials, with concerns about rising college costs and debt legitimacy. During their lifetimes, college costs have risen sharply, with the net price of tuition, fees, and accommodation at a public four-year college increasing by 68% since the 1999-2000 academic year. This has resulted in a significant number of millennials postponing major investments, such as purchasing a home or starting a business, and making employment decisions based on their student loan debt.
When it comes to repaying student loans, borrowers have several options to choose from, depending on their financial situation and goals. Here are some of the most common repayment plans:
- Standard Repayment Plan: This is the most common repayment plan, with a fixed repayment schedule lasting 10 years. It is generally the best option if you can afford it, as you will pay less in interest over time compared to other plans.
- Income-Driven Repayment (IDR) Plans: IDR plans are ideal if you are struggling to meet your monthly payments. These plans tie your monthly payments to a portion of your income, usually between 10% and 20% of your discretionary income. Payments can be as low as $0 if you are unemployed or underemployed, and they change annually. IDR plans extend the repayment period to 20 or 25 years, after which any remaining debt is forgiven. There are several types of IDR plans offered by the government, including Income-Based Repayment, Income-Contingent Repayment, Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE).
- Graduated Repayment Plan: This plan starts with lower monthly payments that gradually increase over time, usually every two years, for a total repayment period of 10 years. This option may be suitable if you expect your income to increase over time, as it can free up money in the short term for other financial goals. However, the payments can eventually triple in size, so you need to be confident that you will be able to afford the larger payments.
- Extended Repayment Plan: The extended plan offers lower initial payments by stretching the repayment period to up to 25 years. This option can reduce your monthly financial burden but may result in paying more interest over the extended duration.
It is important to carefully consider your financial situation and goals when choosing a repayment plan. You can apply for income-driven repayment plans through your federal student loan servicer or at studentaid.gov.
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Frequently asked questions
Millennials have an average of $40,614 in student debt.
46.6% of student loan debt belonged to millennials in 2022, and 25.5% of all millennials had student loan debt in 2021.
Student debt has caused 83% of millennials to put off major investments, such as buying a home or starting a business. 72% of millennials have also made employment decisions based on their student loan debt, and 42% have chosen not to pursue further education.
The rising cost of student debt has become a national crisis, impacting the future of countries that experience it. Student debt also impacts the economy by causing a delay in major financial decisions, such as purchasing a home or starting a business.
Borrowers can explore income-driven repayment plans, forbearance, and public service loan forgiveness programs to address payment affordability. Additionally, creating a realistic financial roadmap based on one's financial situation is essential.
