Lana Oconnell
Student loan debt is a significant issue in the United States, with about 42.5 million Americans holding an average federal student loan debt of $39,075 as of March 2025. The cost of college has been steadily increasing over the years, leading to a growing need for student loans. While many individuals have successfully repaid their loans, a considerable number of borrowers struggle with repayment. As of 2022, 8% were behind on their payments, 43% had outstanding debt but were current on payments, and half had completely repaid their loans. The time taken to repay student loans varies, with an average repayment length of over 20 years, and women taking about two years longer to pay off their loans than men. The high interest rates on student loans, ranging from 5.5% to 8.94% in recent years, further contribute to the challenge of repayment. Additionally, there have been complaints about mismanagement and deception by companies servicing student loans, impacting borrowers' credit ratings and eligibility for federal aid.
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What You'll Learn
Student loan debt statistics
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 debt is held by about 42.5 million Americans, with 20% of US adults reporting they have outstanding student loan debt. This figure rises to 24% for postgraduate degree holders. Women hold nearly two-thirds of the total student loan debt in the US, and on average, they take about two years longer to pay it off. This is partly due to the gender pay gap and the unemployment crisis facing recent graduates.
The cost of college has steadily increased over the last 30 years, with tuition costs at public four-year colleges more than doubling and costs at private nonprofit institutions almost doubling. As a result, more than half of students now leave school with debt. The average federal student loan debt held by Americans as of the first quarter of 2025 was $39,075, a record high. The average level of federal student loan debt has grown by roughly 1% per quarter since 2013.
The time it takes to repay student loans varies, with federal loans generally placed on a standard 10-year repayment plan. However, this can be extended to 20 or 25 years under an income-driven repayment (IDR) plan, after which the remaining balance is forgiven. Private student loans typically have a repayment period of 5 to 25 years, depending on the lender. According to a survey of 61,000 individuals, it takes borrowers an average of more than 20 years to pay off their student loans.
The monthly payments for student loans vary, with 60% of borrowers paying up to $300 per month. Twenty percent pay less than $100, while only 6% have payments of over $1,000 per month. The burden of these payments can be significant, with many people paying more towards their loans each month than they put aside for retirement or education.
The impact of student loan debt is far-reaching, with 57% of Americans saying they would use savings from loan forgiveness to pay off other debts. Additionally, difficulties with student loan payments vary by the type of institution attended, with three in ten borrowers from for-profit institutions falling behind on payments compared to 11% from public institutions and 7% from private nonprofit institutions. The COVID-19 pandemic also disrupted the student loan landscape, with federal student loan payments paused nationwide since March 2020 and the majority of federal loans currently in forbearance.
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Student loan repayment plans
Student loan debt is a significant burden for many, with a total of $1.81 trillion held by about 42.5 million Americans. It is the second-largest type of debt after mortgages, and the monthly payments can be higher than what people spend on education or put aside for retirement. Women and people of colour are particularly affected, often having higher monthly payments but lower incomes.
There are various repayment plans available, and it is important for borrowers to understand their options and select a legal, sustainable plan. The U.S. Department of Education is encouraging borrowers to transition to legally compliant plans, such as the Income-Based Repayment Plan, and providing resources to help them compare available options. This is especially important as some borrowers have been misled or placed in plans that are not eligible for loan forgiveness.
To pay off loans faster, borrowers can pay more than the minimum monthly payment, use windfalls like bonuses or tax refunds to make lump-sum payments, explore employer repayment assistance programs, or consider student loan refinancing. However, it is also important to be aware of the risks of defaulting on loans, which can lead to losing eligibility for federal aid and legal action.
While the federal government paused repayments and interest accrual during the COVID-19 pandemic, the resumption of collections has put pressure on borrowers, with many at risk of falling behind or having their credit scores affected. The rate of serious student loan delinquencies is roughly double that of credit card debt.
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Student loan forgiveness
There are several options available for those seeking student loan forgiveness. Public Service Loan Forgiveness (PSLF) is one option, which allows qualifying federal student loans to be forgiven after 120 qualifying payments (10 years) while working for a qualifying public service employer. Qualifying employers include government, the military, state, local, or tribal organisations, and certain non-profit organisations. The PSLF Help Tool, provided by the U.S. Department of Education, can help borrowers determine their eligibility and next steps.
Another option is Income-Driven Repayment (IDR) plans, which cap monthly payments based on income and family size. Depending on the IDR plan, the remaining balance on loans may be forgiven after 20 or 25 years of repayment. The Department of Education has announced changes to bring borrowers closer to forgiveness under IDR plans, including a one-time adjustment to count certain months spent in repayment, deferment, or forbearance towards loan forgiveness.
It is important to note that only federal student loans managed by the Department of Education qualify for the one-time IDR adjustment. Borrowers with Direct Loans or federally-managed FFELP loans will automatically benefit from the adjustment, while those with FFELP loans held by commercial lenders or Perkins loans not held by the ED can benefit by consolidating into Direct Loans by June 30, 2024.
Student loan debt has a significant impact on individuals' finances, with many paying more towards their loans each month than they put aside for retirement or education. The high cost of student loans, coupled with the complexity of the forgiveness process, has led to widespread complaints about mismanagement and deception by companies servicing these loans. As a result, the Federal Trade Commission, Consumer Financial Protection Bureau, U.S. Department of Education, and state Attorney General offices have taken enforcement actions against student debt relief companies scamming debtors.
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Student loan debt demographics
Student loan debt is usually associated with young adults, with those aged 24 and younger having the lowest average balances. Average balances also increase by age group, with those 62 and older having the highest balance.
Student Loan Debt by Age
According to the Federal Reserve of St. Louis, 50% of Black adults have student loan debt, with an average balance of $9,800; 44% of white adults have student loan debt, with an average balance of $8,700; and 37% of Hispanic/Latino adults have student loan debt, with an average balance of $7,000.
Borrowers between the ages of 25 and 34 carry about $500 billion in federal student loans, with the majority of people in this age group owing between $10,000 and $40,000. Borrowers ages 35 to 49 owe more than $620 billion in student loans, with the highest number of borrowers owing more than $100,000 in loans. There are 2.4 million borrowers aged 62 or older who owe $98 billion in student loans.
Student Loan Debt by Education Level
20% of all American adults with undergraduate degrees have outstanding student debt, and 24% of postgraduate degree holders report outstanding student loans. 55% of students from public four-year institutions had student loans, and 57% of students from private nonprofit four-year institutions took on education debt.
Student Loan Debt by Race
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. 40% of Black graduates have student loan debt from graduate school, compared to 22% of white college graduates.
Hispanic student borrowers owe the lowest average monthly payment. White student borrowers with associate’s degrees and 10-year loan terms owe monthly payments of $215. Multiracial student borrowers with the same degree and loan terms also owe monthly payments of $215.
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. 52% of Asian and white student borrowers are the most likely to have a net worth that exceeds their student loan debt.
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Student loan debt impact
Student loan debt has a significant impact on individuals and the wider economy. As of 2025, student loan debt totals $1.81 trillion, with an average federal student loan debt of $39,075. This debt is held by about 42.5 million Americans, with 20% of US adults reporting they have outstanding student loan debt. A further 24% of postgraduate degree holders report outstanding student loans.
The impact of this debt is far-reaching, with individuals making difficult financial decisions and economies experiencing reduced consumer spending, business growth, and homeownership. Student loan debt is the second-highest consumer debt category after mortgages. This has a knock-on effect on the economy, with small businesses particularly vulnerable to the economic impact of student loan debt as they are most likely to rely on personal financing. Student loan debt also negatively impacts workers' economic mobility, the labour market, and racial wealth inequality.
The burden of student loan debt often falls on young people, with 20% of graduates with more than $20,000 in student loans reporting that their debt has discouraged them from pursuing an advanced degree. This debt can also impact career choices, with graduates more likely to take higher-paying positions and less likely to choose lower-paying public interest roles. Student loan debt can also cause an increase in depressive symptoms or health problems, with studies showing an association between student loans and poorer psychological functioning.
The ineligibility of student loan debt for bankruptcy discharge further distinguishes it from other debt types and makes it particularly enduring and impactful on credit and financial health. Falling behind on student loan debt can put individuals' credit scores at risk, with negative consequences for their financial future.
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Frequently asked questions
It is difficult to determine the exact percentage of people who pay off their student loans, but according to a 2022 survey, 43% of adults with outstanding student loans were current on their payments, while 8% were behind. Another survey of 61,000 individuals found that it takes student loan borrowers an average of more than 20 years to pay off their education debt. Additionally, 20% of U.S. adults report having paid off their student loan debt.
Women hold nearly two-thirds of the total student loan debt in the U.S. On average, women who earn bachelor's degrees owe $2,700 more than men upon graduation and take about two years longer to pay it off. This disparity is influenced by factors such as the gender pay gap and the unemployment crisis facing recent graduates.
Among adults under 40 with a four-year college degree, 36% have outstanding student loan debt. Adults with postgraduate degrees are more likely to have larger amounts of student loan debt, with about a quarter (26%) owing $100,000 or more in 2023.
The share of borrowers who fall behind on student loan payments varies depending on the type of institution attended. Three in 10 borrowers who attended for-profit institutions were behind on payments, compared to 11% at public institutions and 7% at private nonprofit institutions.
