University Students Plagued By Debt: How Many?

Student loan debt is a significant issue in the United States, with the total amount of student loan debt owed by Americans reaching $1.75 trillion. This figure includes both federal and private student loans, with federal loans accounting for about 92% of the total debt. The average undergraduate borrower owes around $29,000, and more than half of students leave college with some form of debt. The amount of student loan debt has been increasing over the years, with the cost of college tuition and fees more than doubling over the last two decades. This has led to a situation where many students have to take out loans to pay for their education, with the average student borrowing over $30,000 to pursue a bachelor's degree. The impact of this debt can be significant, affecting the quality of life for those who take out loans and making it difficult for them to buy a house, a car, or even to re-enroll in college.

Average student loan debt in the US

The average student loan debt in the US is a topic that has received a lot of attention in recent years, especially as the cost of higher education continues to rise. Here is an overview of the current situation regarding average student loan debt in the country:

The Rising Trend of Student Loan Debt

The average student loan debt in the US has been on an upward trajectory over the past decade. While there was a slight dip in 2023, with a 1.22% decline in national student loan debt since the beginning of that year, the overall trend indicates a steady increase. This rise in student loan debt can be attributed to soaring college costs, which have more than doubled over the last 20 years. The average total student loan debt, including both federal and private loans, increased by over $5,500 from 2009 to 2015 and by over $8,700 from 2008 to 2017.

Current Average Student Loan Debt

As of 2024, the average student loan debt in the US was approximately $29,300 per borrower. However, this amount varies depending on the type of institution and the student's demographic characteristics. For instance, graduates from private colleges tend to borrow more, with an average debt of $32,062, compared to public college graduates, who borrow around $25,283. Additionally, student loan debt is highest among Black families compared to other races, and higher-income families tend to have higher average student loan debts.

Federal vs Private Student Loan Debt

The average federal student loan debt, as of August 2024, was $37,853 per borrower, while the total average balance, including private loan debt, may be as high as $40,681. Federal student loan debt represents a significant portion of the overall student loan debt, accounting for 92.4% as of 2024, while private student loan debt constitutes the remaining 7.57%.

Impact of Student Loan Debt

Student loan debt has a significant impact on borrowers' lives, affecting their credit scores, delaying homeownership, reducing retirement savings, and contributing to stress and mental health issues. It may take borrowers up to 20 years to pay off their student loans, and the default rate is a concern, with potential legal implications and loss of eligibility for further federal aid.

Addressing Student Loan Debt

The issue of student loan debt has gained political attention, with proposals such as Bernie Sanders' plan to cancel all existing student debt and make public colleges and universities tuition-free. Additionally, there are loan forgiveness programs, income-driven repayment plans, and refinancing options available to help borrowers manage their debt.

In conclusion, the average student loan debt in the US continues to be a pressing issue, with far-reaching consequences for borrowers and the economy. While there have been efforts to address this problem, it remains a challenge for millions of Americans pursuing higher education.

Federal vs private student loans

In the US, student loan debt is now the second-highest consumer debt category after mortgages. As of 2025, student loan debt totals $1.773 trillion, with the outstanding federal student loan balance at $1.693 trillion.

Federal student loans are provided by the government, while private student loans are provided by banks, credit unions, and other financial institutions. Here is a comparison of the two:

Federal Student Loans

• No credit check required (except for PLUS Loans)
• Income-driven repayment plans available
• Borrowers can change their repayment plan after taking out the loan
• Fixed, lower interest rates
• Standard term is 10 years
• Loan forgiveness options available
• Upfront fees
• Loan limits
• No choice of servicer

Private Student Loans

• Credit check required
• Different repayment plans available, including interest-only or fixed payments while in school
• Choice of fixed or variable interest rates
• Flexible loan terms (between 5 and 20 years)
• No upfront fees
• Higher loan amounts
• Few borrower protections
• May have higher interest rates than federal loans
• Requires searching for your own loans

Whether you choose federal or private student loans, or a mix of both, depends on your financial situation and repayment options. Federal student loans are generally the best starting point due to their benefits and protections, such as fixed interest rates, subsidies, and repayment programs. However, if you have maxed out your federal loan limit or are a graduate/professional student or parent with a solid credit score, private student loans may offer lower interest rates and higher loan amounts.

Student loan forgiveness

Student loan debt is a significant issue in the United States, with the total debt reaching $1.773 trillion as of January 2025. This figure includes both federal and private loans, with federal loans making up 92.4% of the total debt. The average student in the US borrows over $30,000 to pursue a bachelor's degree, and it can take them up to 20 years to pay off their loans. As of 2025, there are 42.7 million borrowers with federal student loan debt, and the average federal student loan debt per borrower is $37,853.

The Public Service Loan Forgiveness (PSLF) program is also at risk under the Trump administration. This program offers loan forgiveness to borrowers who work in public service jobs and has benefited up to 10,100 teachers. However, the approval rate for PSLF applications has been low, with only 3.3% of applications approved since the program's inception.

Another program that may be impacted is the Borrower Defense regulations, which allow borrowers to get their debt excused when their school engages in misconduct. The student loan interest deduction, which allows borrowers to deduct interest paid on eligible private or federal education debt, is also under threat.

While there is support for student loan forgiveness, there is also opposition. According to a survey, 31% of Americans oppose student loan debt cancellation. There are concerns about the fairness of forgiving student loans, especially for those who have already paid off their debt or chose not to pursue higher education due to the cost. Some also worry about the potential economic impact of widespread loan forgiveness, including increased taxes or inflation.

Student loan default

Student loan debt is a significant issue in the United States, with the total debt reaching $1.773 trillion as of 2025. This figure includes both federal and private loans, with federal loans accounting for 92.4% of the total debt. The average student borrows over $30,000 to pursue a bachelor's degree, and it can take them close to 20 years to pay off their loans.

Defaulting on student loans can have serious consequences for borrowers. Default technically occurs after 270 days of overdue payment, and it can lead to legal implications, a damaged credit rating, and lost eligibility for further federal student aid. It can also result in wage garnishing and the loss of tax benefits. In the United States, 5.47% of all student loan debt was in default in 2021, and an average of 8.15% of student loan debt is in default at any given time.

To assist borrowers in default, the U.S. Department of Education offers temporary programs like the "Fresh Start Program" and the "on-ramp" program, which help borrowers restore their good standing and access federal benefits. Loan consolidation is another common method used by indebted borrowers, as it allows them to pay off multiple loan debts with one large loan.

The student loan default rate varies across different groups of borrowers. For example, students who attended private for-profit colleges are more likely to default on their loans than those who attended private non-profit colleges. Additionally, arts and humanities majors who attended non-selective schools are more likely to default on their loans. Race and ethnicity also play a factor, with 21.8% of Black or African American student borrowers defaulting on their loans, compared to 10.1% of Hispanic/Latino borrowers and 6.1% of White/Caucasian borrowers.

Income-driven repayment plans

There are various types of income-driven repayment plans available, each with its own specific features and eligibility requirements. Here is an overview of some common types:

• Revised Pay As You Earn Repayment Plan (REPAYE): This plan is available to borrowers with federal student loans, including Direct Loans and PLUS Loans. Under REPAYE, your monthly payments will be set at 10% of your discretionary income, which is calculated based on your income and family size. If you make consistent payments for 20 years (25 years for graduate students), the remaining balance on your loans may be forgiven.
• Pay As You Earn Repayment Plan (PAYE): PAYE is similar to REPAYE but has stricter eligibility requirements. It is available to borrowers who took out their first loan after October 1, 2007, and received a disbursement after October 1, 2011. PAYE also caps monthly payments at 10% of discretionary income, but it has a shorter repayment period of 20 years for all borrowers.
• Income-Based Repayment Plan (IBR): IBR is another option for federal student loan borrowers. It sets monthly payments at either 10% or 15% of your discretionary income, depending on when you first borrowed. If you borrowed before July 1, 2014, your payments will be based on 15% of your income. For those who borrowed after that date, payments will be based on 10%. After 20 or 25 years of consistent payments, depending on the repayment plan, the remaining balance may be forgiven.
• Income-Contingent Repayment Plan (ICR): ICR is available to borrowers with Direct Loans. It sets monthly payments at either 20% of your discretionary income or the amount you would pay on a fixed 12-year repayment plan, whichever is lower. After 25 years of payments, any remaining balance may be forgiven.

It is important to carefully review the eligibility requirements and terms of each income-driven repayment plan before selecting one. Additionally, it is crucial to stay in communication with your loan servicer and provide updates on any changes in your income or family size, as these factors can impact your monthly payment amount. Remember, income-driven repayment plans can provide much-needed flexibility and peace of mind, but they may also extend the life of your loan and result in paying more interest over time.

Frequently asked questions