Average US Student Loan Debt Statistics: Best to Worst
Student loan debt is one of the main driving forces behind the US debt crisis. Student loan borrowers outnumber those with credit card debt and personal loan debt and their accumulated obligations account for the biggest share of outstanding unsecured debt. College graduates are being crippled by this issue as they take masses of outstanding student loan debt with them on their journey into adulthood and independence.
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In 2019, student debt hit $1.5 trillion, more than a tenth of total personal debt in the United States (a figure that includes mortgages). Modern student loan borrowers are accumulating bigger debts, facing a greater struggle to make payments, and suffering more than students at any other time in US history.
And that’s just the tip of the iceberg.
Average Student Loan Debt in the United States
The average student debt is a smidgen under $30,000. That’s a lot of money, but it doesn’t paint a complete picture. Tuition fees differ from school to school and region to region, and then you have to consider that someone chasing an art’s degree is going to pay considerably less on average than someone chasing a degree in law or medicine.
But before we focus on the specifics, there is some interesting data to be found in the broader statistics. The average loan payment, for instance, is $250 a month, while a third of students are not required to pay a penny due to deferment.
The statistics also tell us that as many as 20% of students are behind on their loan payments, a figure that has increased by around 1% per year over the last few years and one that is significantly worse for students with a less than an associate degree. The average student loan debt has also increased year on year.
- Close to 45 million Americans have some form of student loan debt.
- A borrower has a 10% chance of defaulting on their loan payments.
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- Total student loan debt is close to three times larger than total credit card debt.
- Close to 90% of graduates from for-profit colleges have loans.
Which State Has the Highest Student Loan Debt?
In our guide to The Average Credit Scores by Age and State, we discussed the fact that Minnesota has the highest average credit score in the United States in addition to the third-lowest poverty rate. However, things aren’t quite as positive where student loan debt is concerned.
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Minnesotans have the third-highest average debt across the country. They are also one of the lowest-ranked states for providing job opportunities to college graduates. South Dakota has the highest overall and is followed closely by Connecticut and Pennsylvania.
Percentage of Millennials with Student Loan Debt
Millennials are the hardest hit generation where student loans are concerned. But this is mainly because Millennials are the most educated generation. In fact, 4 out of 10 individuals in this age group have at least a bachelor’s degree, compared to fewer than 3 out of 10 for Baby Boomers and Gen Xers.
Millennials share $500 billion in outstanding student loan debt, amounting to around $33,000 each.
Demographics of Student Loan Debt
Borrowers in medical school owe the most, accounting for more than $160,000 on average. Those in law school aren’t very far behind, with an average of $140,000. Science and education degrees come in at $50,000, while those involved with the Arts have between $5,000 and $10,000 more.
The fastest-growing demographic for student loans are those aged 60 and above. The number of borrowers in this age group has grown by 400% over the last few years. It’s not because we’re seeing an influx of mature students, but rather that parents and grandparents are acquiring loans to help their children and grandchildren.
They’re becoming student loan borrowers several decades after finishing higher education!
Which Federal Student Loan Programs Have the Highest Debt?
Federal student loans account for more than 90% of all student loan borrowers. These programs tend to offer more favorable terms and also provide student loan forgiveness programs and financial aid, as discussed a little further down.
Direct Loans has the majority of these, with more than 34 million student loan borrowers on the books. This is followed by FFEL Loans and Perkins Loans.
Direct federal student loans are provided by the US Department of Education and there are four types available (Subsidized, Unsubsidized, PLUS, and Consolidation) and these are all aimed at helping students in higher education.
Sallie Mae is the biggest student loan servicer in the private sector, with millions of loan borrowers accumulating close to $120 billion in total debt. There are many more federal student loan debts in default, but only because there are many more federal student loans in general. It is said that more than 5 million federal student loans are in default at any time, which is around a quarter of the number in repayment.
Student Loan Debt Outlook
The standard federal student loan repayment plan predicts that borrowers will repay within a decade. But this is optimistic, to say the least. In fact, it can take an average of 23 years for a borrower to pay off a bachelor’s degree, which means many former students are still struggling to meet their loan repayment obligations well into their forties.
For the average borrower, this debt is a dark cloud hovering over their heads throughout their young lives, one that seems to impact every financial decision they make. But there are multiple ways to make it more manageable, including student loan forgiveness programs and loan repayment plans, as discussed below.
Negotiating a Loan Repayment Plan
Federal student loans offer loan repayment plans that can be arranged through your loan servicer. These can make the debt more manageable and are designed to help you avoid defaulting and to ensure the debts are cleared promptly and without issue.
One of the most common repayment plans is known as an Extended Graduated Student Loan Repayment. You need to owe at least $30,000 to qualify for this debt, which ensures the majority of full-time students can apply, and it aims to stretch the repayment length to 25 years, or 300 total payments, with an increase every 2 years.
This option increases the total length of your loan and decreases monthly payments. In doing so, however, it significantly increases the amount of interest that you pay. As discussed in our guide to Debt Consolidation Companies, every time you increase the term and reduce the repayment, you’re increasing the interest and thus repaying much more over the lifetime of the loan.
There are also income-driven repayment plans offered by the federal government. With these plans, your repayments are fixed as a percentage of your income and you may qualify for loan forgiveness on the remaining balance after 20 years.
Student Loan Forgiveness Programs
Student loan forgiveness, as the name suggests, allows you to have some or all of your debt forgiven. If that sounds too good to be true, it’s because it is, at least partially. The unfortunate truth is that student loan forgiveness isn’t available to everyone. In fact, only a small minority of borrowers can benefit and even then, it’s unlikely they’ll have all their debts forgiven.
Here are some of the available forgiveness programs:
Public Service Student Loan Forgiveness
If you work for the government or qualifying nonprofits, you may qualify for loan forgiveness after you have made 120 payments. This only makes sense when you’re on an income-driven plan, otherwise, the loan would likely be repaid in full before any loan forgiveness kicked-in.
Nurse Loan Forgiveness
There are several options available for nurses, including loan cancellation and the NURSE Corps Loan Repayment plan, the latter of which can clear up to 85% of the debt for all qualified nurses. These options are both highly competitive and won’t be available to the average nurse, even if they qualify, but there is also a Public Service Loan Forgiveness program, which is much more accessible.
Forgiveness for Teachers
If you work in a low-income public school, you may qualify for student loan forgiveness after 5 years. A total of $17,500 can be paid to help teachers clear their debts. To qualify for this, you need to have acquired your loans after October 1998.
Forgiveness for Military
Borrowers in the armed forces may qualify to have most of their student debts forgiven and there are also interest rate reductions available for all debts:
- SCRA: The Servicemembers Civil Relief Act (SCRA) offers to reduce interest rates for everyone who enlists, providing they acquired the loans before signing up. They can reduce your interest rate to just 6% and this applies to all forms of debt, not just student loans. All loans that began after August 2008 qualify for this and it applies to borrowers and cosigners.
- Navy, Army, and Air Force Repayment: If you are enlisting you can receive the greater amount of 15% or $1,500. There is a cap, however, and you need to enlist for at least 1 year.
- CLRP: The College Loan Repayment Program (CLRP) can make payments towards your loans if you enlist, but there are stipulations concerning interest payments and a minimum enlistment period.
Can I Pay to Enroll?
Wherever there is money and desperation you’ll find scams, and student loans are no exception. There are many companies that charge for enrollment into services they claim can clear student debt. They nearly always promise to get you enrolled on a special government program, with a guarantee you’ll have some or all of your loans forgiven.
As you might have guessed, these services are scams. There are government programs that will forgive your debts, but these don’t charge, they don’t guarantee, and as discussed above, they require you to meet a lot of strict criteria.
Be very wary of any company that claims to provide this service at a cost and doesn’t operate from a .GOV domain.
What Happens to Student Debt When You Die?
It’s a pretty morbid question, but it’s one that needs to be addressed. There are a lot of urban myths concerning what happens to debt when you die, with some ill-informed individuals suggesting that it’s automatically transferred to the deceased’s next of kin, be they a son, a partner, or even a cousin! This is simply not true, and unless that next of kin was a co-signer or a spouse in a community property state they will not be responsible for the debt directly.
However, debt will transfer to the deceased’s estate and their assets will be used to clear it and ensure creditors get what’s owed to them. This is very similar to what happens to your student loan debt when you die, but there are a couple of exceptions.
It all comes down to whether you have federal or private loans:
What Happens to Federal Student Loans when you Die?
Whether your loan is subsidized or unsubsidized, it will be cleared upon your death. Your loved ones will not be asked to bear the burden and it will to be passed onto your estate.
This is true even if you’re a co-signer, which is very poignant when you consider that many parents and grandparents are co-signing loans on behalf of their kids and grandkids. If the co-signer dies, the debt will die with them and the student will not be required to make any repayments. The same is true if the student dies—the debt will go with them and the co-signer will not be required to make further payments.
There is an exception, however, for parents or grandparents who take the loan out together. If one of these parties passes away, the debt will become the sole responsibility of the living guardian. Only when they die or when the debt has been repaid will it be wiped clean.
What Happens to Private Student Loans when you Die?
As you might expect, private lenders are a little less forgiving when a borrower dies before repaying the loan in full. There are many instances in which they will forgive the loan just like a federal lender.
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However, they may also decide to chase the borrower’s estate, at which point the assets will be used to clear the debt.
It may depend on the size and length of the loan, it may all come down to how much the borrower has in their estate, but this is a decision that will be made once the borrower passes away. The same is true for co-signers, which is where it gets a little more complicated.
The co-signer has agreed to assume all responsibility for the loan and the contract may stipulate that this responsibility remains even in the event of the student’s demise. Should this happen, the lender can choose to demand continued payment of the loan from the co-signer, although they may also practice discretion and discharge the debt.
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Summary: A Long Way from a Solution
We’ve covered a lot in this guide, from loan forgiveness programs to the cost of four-year colleges and the likelihood that college graduates will repay their debts while they’ll still young enough to enjoy the freedom it provides.
But you’ve probably heard it all before. This issue is never too far from the headlines—local news sites bemoan the problems that low-income students face; tabloids eagerly compare the income generated via the average degree with the outgoings from student loan payments.
The truth is, this issue has existed for many years, it seems to be getting worse with each semester, and it will likely never go away. That’s the bad news. The good news is that debt relief, forgiveness, and financial education is more attainable than ever. And while it’s not quite turning the tides, it is stemming the flow and helping students with perseverance to battle through.