Douglas Olsen
University student debt is a growing concern in the United States, with the average student loan debt increasing by over $5,500 from 2009 to 2015 and continuing to rise. The average federal student loan debt balance is $38,375, while the total average balance, including private loans, can be as high as $41,618. In 2023, 60% of graduate degree holders, 57% of bachelor's degree holders, and 39% of associate degree holders went into debt for their education. The type of school attended also impacts debt, with public colleges generally being less expensive than private colleges. Students from low-income backgrounds are more likely to take out federal loans, and Black adults are more likely to hold student loan debt. The COVID-19 pandemic further exacerbated financial challenges, with many borrowers facing difficulties in making payments.
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What You'll Learn
Student loan debt statistics
Student loan debt is a crisis in the US, with millions of Americans affected. As of 2024, Americans owed over $1.7 trillion in student loan debt. This figure rose to $1.75 trillion in 2025, with federal student loans accounting for $1.6 trillion to $1.7 trillion of that amount. Federal student loans make up the vast majority of American education debt, with estimates ranging from 92% to 92.4% of all outstanding student loans.
The average student borrower takes 20 years to repay their student loan debt. The average student loan debt balance is $38,375, while the total average balance, including private loan debt, may be as high as $41,618. The median debt is lower, ranging from $20,000 to $24,999. The average college student borrows $29,400 in loans to pay for their degrees. Students pursuing bachelor's degrees borrow an average of $31,960 to attain their degree.
The cost of college has steadily increased over the last 30 years, leading to a greater need for student loans and other forms of financial aid. Tuition costs at public four-year colleges have increased from $4,160 to $10,740 in this timeframe, while tuition at private nonprofit institutions has risen from $19,360 to $38,070. As a result, more than half of students leave school with debt. 55% of students from public four-year institutions and 57% of students from private nonprofit four-year institutions took on education debt.
Younger people hold the majority of student loan debt. Borrowers between the ages of 25 and 34 carry about $500 billion in federal student loans, with most owing between $10,000 and $40,000. However, student loan debt is not limited to young adults, as borrowers aged 35 to 49 owe more than $620 billion in student loans, and 2.4 million borrowers aged 62 or older owe $98 billion in student loans.
Student loan debt disproportionately affects people of color and women, who are more likely to have student loan debt and higher balances than their white male counterparts. 50% of Black adults have student loan debt, with an average balance of $9,800, compared to 44% of white adults with an average balance of $8,700 and 37% of Hispanic/Latino adults with an average balance of $7,000.
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Student loan forgiveness
While there have been proposals and efforts to address this issue, such as the Biden-era regulations and income-driven repayment plans, the House of Representatives recently voted to repeal several key federal student loan forgiveness and repayment programs. This decision was driven by Republican lawmakers aiming to reduce federal spending. The reconciliation bill includes significant changes, such as repealing borrower defence and closing school discharge programs, eliminating Public Service Loan Forgiveness for medical and dental residents, and restricting the Department of Education's ability to enact new broad student loan forgiveness initiatives.
The impact of these changes is far-reaching, affecting borrowers from various backgrounds. Middle-income students are the most likely to take out federal loans, with 50.8% of them doing so. Female bachelor's degree holders are more likely to borrow federal student loans than their male counterparts, borrowing 3.63% more. The share of student-loan borrowers' income going towards debt payments has remained stable or even decreased over time. Nevertheless, 51% of undergraduate students at public four-year universities graduate without any debt, and those with debt face monthly payments of $275 on average.
While the debate around student loan forgiveness continues, it is essential to consider the potential consequences of these decisions on the financial well-being and future opportunities of students and graduates. The rising cost of higher education and the burden of student debt have significant implications for individuals' long-term financial stability and their ability to pursue homeownership, affecting their overall economic prospects.
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Student loan default rates
The national student loan default rate in the US for the 2017 fiscal year was 9.70%, a slight decrease from the previous year's rate of 10.10%. Default rates vary across different types of institutions, with for-profit institutions having the highest rate (14.70%), followed by public institutions (9.30%), and private institutions (6.70%). Additionally, certain states tend to have higher default rates, with Mississippi at 15.19% and Oklahoma at 15.15%, while states in the Northeast and Midwest generally have lower rates.
The default rates also differ depending on the loan program. The Federal Direct Loan Program (FDLP) and the Federal Family Education Loan Program (FFELP) are two major federal programs, with default rates of 6.6% and 6.7%, respectively, as of 2000. Within FDLP, borrowers with consolidated loans who used the standard payment plan had a lower default rate than those with non-consolidated loans. However, when income-contingent repayment plans were used, borrowers with consolidated loans had a higher default rate.
The default rates also vary based on student demographics. Middle-income students are the most likely to take out federal loans (50.8%), followed by students living in campus housing (57.4%), and married undergraduates (41.7%). Female students with bachelor's degrees are more likely to accept federal loans (49.3%) and borrow more than their male counterparts.
With the government resuming collection efforts on defaulted loans, there are concerns about a potential surge in default rates. However, relief measures like the Fresh Start and SAVE plans have been implemented to assist borrowers. Overall, while student loan default rates are a significant concern, they do not appear to be severely impacting overall household finances or contributing to increased defaults in other areas of household borrowing.
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Student debt by state
Student loan debt is a pressing issue in the United States, with the total federal student loan balance reaching $1.6 trillion at the end of 2024. This figure has more than tripled since 2007, when it stood at $516 billion. The average student loan debt per borrower was $38,375 at the end of 2024, a $1000 increase from the previous year and nearly double the average in 2008. The median student loan debt is lower, ranging from $20,000 to $24,999.
When examining student debt by state, we can observe varying trends across the country. In 2024, the District of Columbia had the highest average federal student loan debt, with a staggering amount of $54,795 per borrower. D.C. also led the nation in the percentage of indebted student borrowers per capita, with 17.2% of its residents burdened by student loans. On the other end of the spectrum, North Dakota had the lowest average federal student loan debt, with a more manageable $29,647. Utah residents are the least likely to carry student loan debt, and Hawaii has the smallest proportion of indebted student borrowers.
Maryland stands out as a state where residents are more likely to have substantial student loan debt. The high cost of living in Maryland and a significant population of college graduates contribute to borrowers facing the highest average outstanding balances in the country. The average federal student loan debt in Maryland is $43,867, closely followed by Georgia with an average of $42,135. Virginia is the third state where the average debt surpasses the $40,000 mark.
It is worth noting that while younger borrowers are often assumed to carry larger debt balances, federal data reveals a different picture. Borrowers aged 24 and younger owe an average of just over $14,000 in federal student debt, while those aged 62 and older carry an average debt of over $43,000. This discrepancy can be partly attributed to older borrowers taking out loans for their children's or grandchildren's education. Additionally, students pursuing advanced degrees are more prone to take out student loans, with 60% of graduate degree-holders and 57% of bachelor's degree-holders incurring student debt.
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Student loan debt by race
Student loan debt is a significant issue in the United States, with Americans owing a collective $1.61 trillion in student loans as of Q3 2024. This amount is larger than the GDP of most countries. While this problem affects a large portion of the American population, it is evident that students of colour, particularly Black students, are disproportionately impacted.
Black students borrow the most and face the most challenges in repayment. Black borrowers owe an average of $25,000 more than White borrowers. Black women, in particular, hold the most debt in both graduate and undergraduate degrees. They are followed by women of multiple races, then Black men. Black women are less likely to enrol in higher education than White women, yet they leave school with more student loan debt and take longer to pay it off due to the gender and racial pay gap.
Hispanic and Latino borrowers are the most likely to delay major life decisions such as marriage and having children due to their student loan debt. 32.5% of Hispanic borrowers have postponed marriage, while 37.4% have delayed having children.
The wage gap by race contributes to the disparities in student loan debt. Graduates who enter high-paying industries, such as STEM fields, can more easily repay their loans. In contrast, those disproportionately represented in low-wage positions may struggle to meet the minimum required payments. A Federal Reserve Bank of Richmond report found that 30% of Black college graduates defaulted on their federal student loans, compared to 10% of White graduates. Black college attendees have a net worth that is $8,500 less than their White peers, and White bachelor's degree holders earn 25.5% more in median annual income.
While student loan debt is a widespread issue, it is clear that race plays a significant role in the distribution and repayment of this debt, with students of colour bearing a heavier burden.
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Frequently asked questions
As of 2024, around 42 million US adults carry student loan debt.
The average federal student loan debt balance is $38,375, while the total average balance (including private loan debt) may be as high as $41,618.
As of 2024, student loan debt in the US stands at a total of over $1.7 trillion.
