Student Debt: The Average Cost Of A Degree

Student debt is a growing problem, with the cost of college having steadily increased over the last 30 years. As costs have risen, so has the need for student loans and other forms of financial aid. In the US, more than half of college students leave school with debt. The national average student loan debt is $35,210, but this varies by state, with Maryland, Georgia, and Virginia having the highest average student loan debt balances per borrower. The average monthly payment among student loan holders is between $200 and $299.

Average student debt in 2024

The average student debt in 2024 has seen an increase compared to previous years. The average federal student loan debt increased by 2.1% from 2023, with all states experiencing an increase in their average student loan debt for borrowers.

The average federal student loan debt among Black and African American borrowers upon graduation with a bachelor's degree is $33,960, the highest among all racial groups. White student borrowers with a bachelor's degree owe on average $30,720. Asian college graduates are the fastest to repay their student loan debt. 64% of student loan debt belongs to women, with Black women having the highest average amount of debt.

The average monthly payment among student loan holders is between $200 and $299. University graduates owe an average of $28,244 a year after leaving school. The average private nonprofit university student borrows $33,910 to complete a bachelor's degree, whereas for-profit students borrow an average of $40,970. Postsecondary students, including those earning certificates and associate degrees, borrow on average $25,670 to complete their degree.

In 2024, South Dakota saw the greatest increase in average federal student loan debt per borrower, with an additional $1,381. Hawaii was second with an additional $1,200 per borrower. The average Stafford Loan balance increased by 28%, while the average Grad PLUS loan balance increased by 45% since 2014.

The cost of college has steadily increased over the last 30 years, with tuition costs at public four-year colleges growing from $4,160 to $10,740. This increase in costs has resulted in a greater need for student loans. As a result, more than half of students now leave school with debt.

Average monthly student loan payments

The average monthly student loan payment in the US is estimated to be between $200 and $299, with some sources stating $500, $523, or $536 per month. The final amount depends on the type of loan, loan amount, interest rates, and repayment plan. It also depends on whether the borrower made payments during their studies or chose to take a grace period. The average borrower takes more than 20 years to repay their student loan debt.

The average monthly student loan payment of $523 is equivalent to 10% of a $62,760 annual gross income (GI). $376 in monthly payments is 10% of $45,120. According to the 28/36 rule of finance, 36% of income is the maximum amount that should go toward paying off debt. $523 monthly payments are equivalent to 36% of a $17,433 annual GI. The average starting salary among all new graduates with bachelor's degrees is $64,291. 10% of the average starting monthly salary for new graduates is $536.

In 2005, the average student loan payment was $227; adjusted for inflation, this is equivalent to $376 in 2025. Student loan interest rates are at historic highs, and current students may not be able to pay off their student loan debts within the recommended 10-year timeline. The interest rate for Direct Subsidized and Unsubsidized federal student loans to undergraduate borrowers is 6.53%. The average outstanding federal student loan debt per borrower is $38,375.

Since the Department of Education blocked access to income-driven repayment plans, student loan borrowers have reported significant spikes in their monthly payments. The SAVE plan, a Biden-era income-driven repayment program, was blocked by a federal appeals court, and the Trump administration cut off access to all income-driven repayment plans. With the income-driven repayment system now down, borrowers pursuing student loan forgiveness will fall behind on their progress if they remain in a forbearance.

Racial disparities in student debt

The cost of college has been steadily increasing over the years, with tuition costs at public four-year colleges growing from $4,160 to $10,740 and from $19,360 to $38,070 at private non-profit institutions (adjusted for inflation) in the last 30 years. As a result, more than half of college students leave school with debt. The national average student debt is $37,693, while the average federal student loan debt balance is $38,375, and the total average balance (including private loan debt) may be as high as $41,618. The average monthly payment among student loan holders is between $200 and $299. University graduates owe an average of $28,244 a year after they leave school.

Racial and ethnic variations in student loan debt and repayment are due to socioeconomic factors, rather than physical or inborn characteristics. Borrowers of certain races and ethnicities face exceptional obstacles in their pursuit of advanced education. Black families, already disadvantaged by generational wealth disparities, rely more heavily on student debt and riskier forms of student debt than white families. Black students would find it harder to pay for and enrol in college without loans.

Black and African American college graduates owe an average of $25,000 more in student loan debt than white college graduates. Four years after graduation, Black students owe an average of 188% more than what white students borrowed. 48% of Black student borrowers and 17% of White student borrowers owe more than they initially borrowed. 40% of Black graduates have student loan debt from graduate school, compared to 22% of white college graduates. Black students are the most likely to borrow federal loans at 82.9%. Black borrowers are also more likely to indicate they would use loan forgiveness to pay off their debt. Student loan debt forgiveness would immediately increase the wealth of Black Americans by up to 40%.

Among multiracial degree holders, 58% of Black borrowers do not believe student loans have advanced racial equality, and 66% regret taking out student loans to fund their education. Black and African American student borrowers are the most likely to struggle financially due to student loan debt, making monthly payments of $258. Asian college graduates are the fastest to repay their loan debt and the most likely to earn a higher salary to help pay for student loan debt.

The impact of student debt on wealth accumulation

The cost of college has been steadily increasing over the years, with tuition costs at public four-year colleges growing from $4,160 to $10,740 and from $19,360 to $38,070 at private nonprofit institutions. This has resulted in a corresponding increase in student loan debt, with more than half of students leaving university with some form of debt. The average total student loan debt, including federal and private loans, increased by over $5,500 between 2009 and 2015, and while the average amount borrowed has stabilized in recent years, it continues to hover above $29,000.

The impact of this debt on an individual's wealth accumulation is significant. Student loan debt negatively affects economic mobility, the labor market, and racial wealth inequality. It particularly affects low-wage workers, who are burdened by the consequences of student debt at a time when their lifetime earnings are lowest and they have the least capacity to pay off their loans. This debt is often carried well into middle age and beyond, with borrowers aged 35 to 49 owing more than $620 billion in student loans.

The economic burden of student loans is further exacerbated by their ineligibility for bankruptcy discharge, making it a particularly enduring debt that impacts credit and financial health. The high debt-to-income ratio leads to a decline in consumption, with student loan debt reducing consumer spending, business growth, and homeownership. It also affects the decisions of borrowers, with 35% opting not to take a vacation due to their debt, and 31% delaying a car purchase.

Furthermore, student debt has a disproportionate impact on racial minorities, with women and people of color more likely to have higher student loan debt balances than their white male counterparts. This contributes to racial wealth inequality, creating significant obstacles for low-income individuals and exacerbating existing disparities in wealth and education.

The burden of student debt also extends beyond the individual, impacting the economy as a whole. The effect of student loan debt on the economy is comparable to a recession, reducing consumer spending, business growth, and homeownership. It also hinders entrepreneurship, with those owing more than $30,000 in student loan debt being 11% less likely to start a new business.

The rise in student debt over time

The cost of college has been steadily increasing over the last 30 years, and as a result, student debt has been on the rise. Tuition costs at public four-year colleges have increased from $4,160 to $10,740, and from $19,360 to $38,070 at private nonprofit institutions (when adjusted for inflation). This shift has resulted from a dramatic divestment in higher education by state legislatures, with state funding cuts shifting the financial burden to students and their families.

The average total student loan debt, including federal and private loans, jumped by more than $5,500 from 2009 to 2015, and by over $8,700 from 2008 to 2017. While the amount borrowed has stabilized in recent years, the average total student debt continues to hover above $29,000. Graduates from the class of 2023 who took out loans to pursue a bachelor's degree borrowed an average of $29,374, which is $1,714 more than the class of 2013. This represents a 6% increase in the amount borrowed over that decade.

The increase in student debt is also due to the rising cost of college tuition and fees, which has more than doubled over the last 20 years. Federal education spending via student loans has nearly tripled since 1980, increasing by 171.1% when adjusted for inflation. The average federal student loan debt has doubled since 2007, increasing by 108% or 6% each year. This has resulted in a student loan debt crisis, with over 43 million Americans affected.

Younger graduates, aged 25 to 39, are more likely to report financial struggles due to student debt. Borrowers in this age group carry about $500 billion in federal student loans, with the majority owing between $10,000 and $40,000. The pressure of student loans extends well into middle age and beyond, with borrowers aged 35 to 49 owing more than $620 billion in student loans. Even retirees feel the burden, with 2.4 million borrowers aged 62 and older owing $98 billion in student loans.

Frequently asked questions