Janice Lozano
Student loan debt is a pressing issue for millions of Americans, with a collective balance of over $1.7 trillion as of 2024. As of 2025, the total student loan debt stands at $1.81 trillion, with 42.5 million Americans holding this debt. The average federal student loan debt per borrower is approximately $39,000, and the cost of college continues to rise, making it challenging for many to afford without loans. The Biden-Harris Administration's $20,000 federal forgiveness plan was struck down by the Supreme Court in 2023, impacting borrowers. As a result, more than 5 million borrowers have not made monthly payments for over 360 days, and delinquency rates have soared. The pandemic-era relief expiration has further exacerbated the issue, with 20% of borrowers falling behind on repayments.
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What You'll Learn
Student loan debt totals $1.81 trillion
Student loan debt in the US is a significant issue, totalling $1.81 trillion as of 2025. This figure includes both federal and private student loans, and is held by approximately 42.5 million Americans. The average federal student loan debt held per person is $39,075, but the total average balance, including private loan debt, may be as high as $42,673. This makes student loan debt the second-largest type of debt, after mortgages, and it can be a heavy burden on an individual's finances, especially for women and people of colour.
The student loan debt crisis has been exacerbated by several factors. Firstly, many students are unaware that they are eligible for income-driven repayment plans on federal loans, as required by law. Instead, they are placed on suspended payment options that accumulate interest. Additionally, borrowers are often misled about their eligibility for Public Service Loan Forgiveness, only to be denied after years of making payments. Servicers also fail to inform borrowers that loan consolidation restarts their progress towards loan forgiveness. As a result, many borrowers struggle to make payments, and 20% of borrowers are behind on their loan repayments.
Furthermore, there is a lack of transparency and understanding regarding student loan debt. A survey found that 46% of federal student loan borrowers did not know how much they owed, whom they owed it to, or how they would make payments. This uncertainty continued even after the forbearance period ended in September 2023, when interest began accruing again and payments resumed. The pause in payments during the forbearance period improved the finances of many borrowers, but the transition back to making payments proved challenging for some.
The impact of student loan debt extends beyond individual finances. In total, California, Texas, and Florida have the highest outstanding federal student loan debt, which is unsurprising given their large populations. However, when considering average debt per student, New Hampshire tops the list at $39,928, while Utah has the lowest at $18,344. Additionally, the average student loan debt at for-profit colleges and universities is significantly higher, at $43,900.
Addressing the student loan debt crisis is crucial, as it affects the financial stability and well-being of millions of Americans. The high debt burden can hinder individuals' ability to save for retirement, buy homes, or make other investments. It is essential to explore solutions, such as income-driven repayment plans and loan forgiveness programmes, to alleviate the burden of student loan debt and prevent further accumulation of debt.
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20% of borrowers are behind on repayments
Student loan debt is a significant issue in the US, with a total debt of $1.81 trillion as of the first quarter of 2025. This figure includes both federal and private student loans, and it represents a substantial burden on borrowers, with monthly payments of up to $300 for 60% of borrowers.
Compounding this issue is the fact that a significant number of borrowers are behind on their loan repayments. As of 2025, it is estimated that 20% of borrowers are delinquent on their student loan payments, a figure that has skyrocketed since the pandemic-era relief expired. This means that one in five borrowers is struggling to keep up with their loan obligations, which can have serious consequences for their financial health and credit scores.
The reasons for this delinquency rate are multifaceted. Firstly, the complexity of the repayment system and the variety of repayment plans available can be confusing for borrowers. The system is currently undergoing a restructuring, with new borrowers soon having only two repayment options instead of the previously larger menu of plans. This simplification may help borrowers better understand their options and make more informed choices.
However, other factors also contribute to the delinquency rate. Many borrowers are unaware of their repayment options and the specific features and long-term costs of different plans. For example, plans with lower monthly payments often increase the time spent in repayment and cost the borrower more in the long term. Additionally, mismanagement and deliberate deception by companies servicing student loans have been reported, with borrowers frequently placed in suspended payment options that rack up interest instead of income-driven repayment plans.
To address these challenges, it is important to improve financial literacy among borrowers and ensure they have clear information about their repayment options. Additionally, addressing the issues with loan servicing companies and providing better support for borrowers in choosing the right repayment plan can help reduce delinquency rates and improve financial health.
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46% don't know how much they owe
As of 2025, student loan debt totals $1.81 trillion and is held by about 42.5 million Americans. Sixty percent of student loan borrowers pay up to $300 a month, while only 6% pay over $1,000 a month. The average federal student loan debt held by Americans as of March 2025 was $39,075, according to the U.S. Department of Education. Federal student loan debt peaked in the second quarter of 2023 at $1.64 trillion.
While student loan debt can be a significant burden on finances, many are unsure about the specifics of their debt. A 2025 survey by NerdWallet found that 46% of federal student loan borrowers don't know how much student loan debt they currently have, and 57% don't know who their loan servicer is. This lack of knowledge can make it challenging for borrowers to manage their debt and finances effectively.
The survey also revealed that many borrowers benefited from the student loan forbearance period, which allowed them to improve their financial situation. However, as the forbearance period comes to an end, borrowers will need to resume payments and face accruing interest. The transition to making regular payments again, especially with the impact of inflation, may be challenging for those who have not budgeted for it during the forbearance period.
To address this uncertainty, borrowers can take proactive steps to understand their debt better. They can log in to StudentAid.gov or the Federal Student Aid website using their FSA ID to access information about their loan balance, loan servicer, and repayment options. Additionally, contacting the school's financial aid office can help borrowers access their past loan information and connect with the servicer to obtain their current loan balance.
By taking these steps to gain clarity on their debt, borrowers can make informed decisions about their repayment strategies and budget accordingly. It is important to note that there are various repayment plans available, such as the standard, extended, and income-driven repayment plans, which borrowers can explore to find the best option for their financial situation.
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70% of complaints are mismanagement-related
Student loan debt is a significant issue in the US, with a total debt of $1.66 trillion as of March 2025, according to the Department of Education. This figure rose to $1.81 trillion in the first quarter of 2025, per the Federal Reserve. The average federal student loan debt per person in the US was $39,075 as of March 2025, a record high. This debt is the second-highest consumer debt category, after mortgages.
The issue of student loan debt is widespread, with 20% of US adults with undergraduate degrees and 24% of postgraduate degree holders reporting outstanding student loans. Moreover, 20% of borrowers are behind on their loan repayments, and delinquency rates have skyrocketed since pandemic-era relief expired.
The burden of student loan debt is not limited to financial strain. It also has a significant impact on the mental health and well-being of borrowers. Many borrowers have expressed that student loan forbearance has improved their finances and provided some relief. However, as of 2025, this forbearance is coming to an end, and borrowers will need to resume payments.
In this context of widespread student loan debt, it is not surprising that complaints arise regarding the management of these loans. Notably, 70% of complaints about companies servicing student loans are related to mismanagement and deliberate deception. This includes issues such as failing to inform borrowers about income-driven repayment plans, placing borrowers in suspended payment options that increase interest accumulation, and providing incorrect information about loan forgiveness programs.
The high rate of mismanagement-related complaints highlights the need for better communication and transparency between loan servicers and borrowers. It also underscores the importance of borrowers being proactive in understanding their loan terms, repayment options, and seeking assistance when needed.
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38% of borrowers are current on loans
Student loan debt is a significant issue in the United States, with a total debt of $1.66 trillion as of March 2025, according to the Department of Education. This figure rose to a peak of $1.64 trillion in the second quarter of 2023. The average federal student loan debt per person in the US was $39,075 as of March 2025, a record high. This debt is the second-highest consumer debt category, after mortgages, and can be a significant burden, especially for women and people of color.
The impact of student loan debt goes beyond the financial strain on individuals. With nearly 10 million borrowers at risk of default, the resumption of loan payments could negatively affect the economy. As borrowers struggle to keep up with payments, their credit scores are also at risk of plummeting, making it harder for them to access loans, rent or buy homes. The Trump administration's decision to restart collections and enforce wage garnishment for defaulted loans further exacerbates the situation.
The pause on student loan payments during the pandemic provided some relief to borrowers. From the second quarter of 2020 through the second quarter of 2023, the Department of Education eliminated interest and allowed borrowers to pause payments, slowing the average growth rate of federal student loan debt. However, as of May 2025, the pause on payments ended, and collections on defaulted loans resumed. This shift in policy comes at a time of economic uncertainty, with fears of inflation and tariffs affecting consumer confidence.
Among the 42.7 million people with federal student loans, only 38% are actively repaying and current on their debts, according to the Education Department. This means that a significant number of borrowers are facing challenges in keeping up with their loan obligations. The reasons for this could include financial difficulties, lack of awareness about repayment options, or issues with loan servicing companies. It is important for borrowers to understand their repayment options, such as income-driven repayment plans, to avoid falling behind on their loans.
The consequences of student loan debt extend beyond the financial realm. The strain of loan repayments can impact individuals' mental health and overall well-being. It can contribute to stress, anxiety, and a sense of financial insecurity. Additionally, the burden of debt may delay important life decisions, such as purchasing a home, starting a family, or pursuing certain career paths. Addressing the challenges associated with student loan debt requires a comprehensive approach that considers not only the financial aspects but also the emotional and societal implications.
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Frequently asked questions
As of 2025, 42.7 million borrowers owe more than $1.6 trillion in student debt. More than 5 million borrowers have not made a monthly payment in over 360 days and are in default.
There could be almost 10 million borrowers in default in a few months. This would mean that almost 25% of the federal student loan portfolio will be in default.
Only 38% of borrowers are in repayment and current on their student loans.
There are various reasons for people not paying their student loans, including the impact of the COVID-19 pandemic, the high cost of college, and the burden of debt. Some people also face difficulties in transitioning to making large monthly payments after a period of non-payment.
Not paying student loans can result in negative consequences such as damage to credit ratings, debt collection activities, and financial burden due to accumulating interest.
