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Over 44.7 million Americans have student loans on file, adding up to a staggering $1.7 trillion in September 2020. The class of 2019 walked off the stage with an average debt of $28,950. That means, nearly six out of ten graduating seniors had student loan debt.
The US Census reported in 2019 that 32% of Americans held a bachelor’s degree or higher. Many attribute the growing number of Americans pursuing higher education to the job market. A study conducted by Georgetown University found that 35% of jobs required a bachelor’s degree or higher.
The burden of student loans is poised to have lasting effects on graduates as home ownership among Americans under the age of 35 is down and the expected retirement age is rising. With college tuition increasing, it is important for graduates and potential student loan borrowers to practice strategic financial planning in order to plan for future investments.
How many Americans have student loan debt?
- About 42 million Americans currently have student loan debt. [Source: Brookings]
- According to the most recent data, there is currently $1.64 trillion total in student loan debt in the United States. [Source: Federal Reserve]
- 62% of 2019 graduates left college with student loan debt. [Source: The Institute for College Access & Success]
- As of 2019, the average student loan debt per person in the United States was $31,172. [Source: Credit.com]
- There were 42.3 million federal student loan borrowers in 2020. [Source: Federal Student Aid]
Student loan default rates
A borrower defaults on a loan when the payment is more than 270 days late. Missing and defaulting on student loan payments cause severe effects on your credit score and can create barriers when applying for insurance plans and financing, as well as seeking housing and loans.
- 40% of borrowers who entered school in 2004 may default on their student loans by 2023. [Source: Brookings]
- Students who attended for-profit colleges are two times more likely to default within a 12-year period as students who attended public universities. [Source: Brookings]
- At the beginning of 2020, 10.8% of aggregate student loan debt was over 90 days delinquent or in default. [Source: Federal Reserve Bank of New York]
- 25% of all Direct Loan borrowers were either delinquent or in default at the end of 2019. [Source: The Institute for College Access & Success]
Average student loan debt by age
Analyzing student loan borrowers by age demographics can be helpful to understand the financial status of Americans. According to the Pew Research Center, 34% of all student loan borrowers were under the age of 30 and around 22% were between the age of 30 – 44.
Age of direct federal student loan borrowers in 2020 [Source: Federal Student Aid]
- Ages 24 and younger: 7.9 million
- Ages 25–34: 14.8 million
- Ages 35–49: 14.1 million
- Ages 50–61: 6.0 million
- Ages 62 and older: 2.2 million
Growth of direct federal student loan borrowers by age over time [Source: Federal Student Aid]
Of the total student loan borrowers, the largest growth-by-age between 2019 and 2020 was among the 50 to 61 age group. This group experienced a 4.9% growth from 1.1 million borrowers in 2019 to 6 million in 2020.
- Ages 24 and younger: 0.3% decrease
- Ages 25–34: 2% increase
- Ages 35–49: 3.9% increase
- Ages 50–61: 4.9% increase
- Ages 62 and older: 1.1% increase
2019 student loan balances by age group [Source: Experian]
- Ages 24 and younger: 123 billion
- Ages 25–34: 454.6 billion
- Ages 35–49: 406.8 billion
- Ages 50–61: 171.3 billion
- Ages 62 and older: $42.8 billion
Growth of student loan balances by age group [Source: Experian]
The highest growth in student loan balances was among borrowers ages 35 to 49 with a $45.9 billion increase from 2018 to 2019.
- Ages 24 and younger: $4.2 billion decrease
- Ages 25–34: $23 billion increase
- Ages 35–49: $45.9 billion increase
- Ages 50–61: $20.7 billion increase
- Ages 62 and older: $8.4 billion increase
Direct federal student loan outstanding balances
|Balance in September 2020||Number of Borrowers|
|Between $1 and $5,000||7,900,000|
|Between $5,000 and $10,000||7,400,000|
|Between $10,000 and $20,000||9,200,000|
|Between $20,000 and $40,000||9,600,00|
|Between $40,000 and $60,000||4,200,000|
|Between $60,000 and $80,000||2,600,000|
|Between $80,000 and $100,000||1,400,000|
|Between $100,000 and $200,000||2,300,000|
Student loan debt by state
The cost of education is not the same throughout the United States. As universities are funded on a state level and the cost of living changes throughout the country, college graduates are coming out financially ahead or behind others depending on their location.
States with the most student loan borrowers [Source: FRBNY]
- California: 4,029,100 borrowers
- Texas: 3,593,500 borrowers
- New York: 2,654,100 borrowers
- Florida: 2,594,500 borrowers
- Pennsylvania: 2,061,400 borrowers
States with the highest outstanding student loan balance [Source: FRBNY]
- District of Columbia: $58,200
- Maryland: $42,500
- Georgia: $41,100
- Virginia: $38,100
- Florida: $37,900
States with the lowest outstanding student loan balance [Source: FRBNY]
- North Dakota: $27,800
- Puerto Rico: $28,100
- South Dakota: $28,100
- Iowa: $29,600
- Wyoming: $29,700
States with the highest delinquency rates per borrower [Source: FRBNY]
- Mississippi: 15% delinquency rate
- Puerto Rico: 14% delinquency rate
- New Mexico: 14% delinquency rate
- West Virginia: 14% delinquency rate
- Nevada: 13% delinquency rate
Effects of student loan debt
The effects of student loan debt span into the adult lives of graduates entering the workforce. With high monthly loan repayment contributions, graduates are delaying the age that they will be able to purchase a home, get married, have children and retire.
- Home ownership has dropped 21.2% among Americans under 35 since 2009. [Source: Debt.org]
- 60 percent of students say they wished they would have looked more into college financing. [Source: Citizens Financial Group]
- 66 percent of students say paying off student loan debt has taken longer than expected. [Source: Citizens Financial Group]
- 11% of undergraduate students believe they will never be able to retire. [Source: Nerdwallet]
- Four in ten millennials are delaying saving for retirement to reach other financial goals, like paying off student loan debt. [Source: IRI]
- 33 percent of college graduates are working at jobs that don’t require a college degree. [Source: New York Federal Reserve]
- 43.2 percent of recent college graduates are working at jobs that don’t require a college degree. [Source: New York Federal Reserve]
Graduate student loan debt
Between 2015 and 2016, the median debt of graduate students in America was around $66,000. In 2016, students in the medicine and other health sciences programs were graduating with the highest median debt of $246,000, with law students trailing behind with a median debt of $145,500.
Average student loan debt per graduate program
- Master of Business Administration(M.B.A): $66,300
- Master of Education: $55,300
- Master of Arts(M.A): $72,800
- Master of Science(M.S): $62,300
- Other master’s degree: $75,100
- Ph.D: $98,800
- Medicine(M.D., D.O): $246,000
- Law(LL.B. or J.D.): $145,500
Percentage of masters graduates with student loan debt
- Master of Business Administration(M.B.A): 51%
- Master of Education: 62%
- Master of Arts(M.A): 59%
- Master of Science(M.S): 56%
- Other master’s degrees: 70%
- Doctor’s research: 48%
- Doctor’s professional: 75%
Private student loan debt
Taking out a private loan to pay for education is a route that many college students use to fund school. Unlike Stafford Loans that are subsidized by the government, a private loan tends to have a higher interest rate and does not come with any of the benefits of federal loan forgiveness and income-based payment programs.
- 53% of private student loan borrowers from 2015–2016 borrowed less than they could have for a Stafford Loan. [Source: TICAS]
- 43% of private loan borrowers could not have borrowed more with a Stafford loan. [Source: TICAS]
- 7% of all undergraduates at four-year colleges from 2015–2016 borrowed private loans. [Source: TICAS]
- In 2015-2016, 51 percent of private loan borrowers attended schools with tuition costs above $10,000, while 31 percent of borrowers attended schools charging less than $10,000. [Source: TICAS]
- In 2019, interest rates for private student loans reached 14.21 percent, compared to federal student loans with an interest rate of 5.05 percent. [Source: TICAS]
Financial planning for graduates
As graduates entering the workforce are burdened with student debt there is a growing need to practice careful planning to reach financial goals. Paying off student loans will take priority over contributing to any retirement savings accounts or contributing to saving for future life events.
When it is time to prepare for major financial changes, student loan borrowers should consider a number of resources for lessening the burden of their debt:
Student loan refinancing
Student loan refinancing is an option for borrowers who would like a better interest rate, a longer repayment time and a lower minimum monthly payment. Refinancing a student loan is, in certain cases, beneficial for people falling behind on payments or for those who would like to pay off their debts faster.
Student loan consolidation
If a borrower has multiple student loans or other sources of debt, the loans can be consolidated into one lump sum. When considering debt consolidation, it is important to prioritize the financial benefits over any other convenience. For certain borrowers, loan consolidation may not be worth it, as it often brings higher interest rates and a longer term of repayment.
Student loans’ affect on credit
Borrowing any large sum of money will have a large impact on your credit score. Your payment history will become a major contributing factor to a credit score which can quickly decline if you fall behind on payments. If you are unsure if student loans are having a negative effect on your credit score, you can receive a free credit report summary and consultation to help assess your student loans and other credit factors.