Student loans are the fastest-growing type of debt in the United States. Student loan debt is presently at an all-time high of $1.58 trillion, and around 45 million Americans hold student loans. In reality, the majority of college students (65%) graduate with student debt. Furthermore, the average student loan debt per borrower is $38,792, with a monthly payment of $393.

According to the most recent student loan debt figures, student loan debt will total $1.75 trillion by April 2022.

For millions of Americans, higher education promises a road to financial prosperity and opportunity. However, due to escalating college prices, many students are forced to fund their education through student loans. Unfortunately, some borrowers find it impossible to repay their substantial debt after graduation.

Over the last 30 years, the expense of attending college has progressively risen. Tuition at public four-year universities increased from $4,160 to $10,740 over that time period, while tuition at private nonprofit institutions increased from $19,360 to $38,070. (adjusted for inflation). As expenses have grown, so has the need for student loans and other types of financial help.

When weighing your alternatives, it is beneficial to evaluate the larger picture and comprehend the whole impact and extent of student loans. This graph depicts student loan debt in the United States in 2022.

Average Student Loan Debt

$1.75 trillion in total student loan debt (including federal and private loans)

On average, each borrower owes $28,950

Federal student loans account for around 92 percent of total student debt; private student loans account for the remainder.

Student loans were used by 55% of students at public four-year universities.

57 percent of students enrolled in private nonprofit four-year universities incurred educational debt.

Average Student Loan Repayment

Americans take an average of 20 years to pay off their student debts, while it can take up to 45 years or more. With an average student loan debt interest rate of 5.8 percent, many of those borrowers (21 percent) saw their loan debt increase over the first five years.

How does that appear in practice? If you make the average monthly payment of $393 on a $38,792 student loan with a 5.8 percent interest rate, it will take you 11 years to pay it off. You’ll also wind up paying $14,052.09 in interest!

If you take 30 years to pay off the same loan (at a $227 monthly payment), you’ll wind up paying $43,526.30 in interest—more than the initial amount borrowed! Ouch.

And if you’re wondering whether student loan debt (and the interest) is worth it, consider this: 44 percent of high school graduates will attend a four-year college, but only around two-thirds will graduate. And if you take out a student loan but don’t finish your degree, you still have to pay it back—plus interest.

How to Keep Graduate School Student Loan Debt to a Minimum

According to the NCES, around 54% of students borrow for graduate school. Debt is nearly inescapable in some programs — for example, more than 84 percent of doctors in professional degree programs borrow for medical school — but graduate students can take efforts to restrict their borrowing.

Exhaust all free assistance programs. Graduate school is best paid for by scholarships, fellowships, and grants. Inquire at your school about institutional prizes, and look for professional organizations that specialize in the topic you’re interested in to see whether they provide graduate scholarships.

Make use of your earnings. Part-time graduate education while working might let you pay as you go and avoid debt. Furthermore, if you intend to work while enrolled, your employer may contribute to the cost of your education through a tuition reimbursement program. For further information, contact your human resources department. If you work for a university, your income or stipend may assist you in meeting your living expenses.

Borrow only what you require. You will always have to pay interest on what you borrow because there are no discounted loans for graduate school. Graduate PLUS loans can cover up to the cost of attendance at your institution, which may include expenses such as child care and transportation for graduate students.

However, before borrowing to cover all of your expenses, investigate whether you can reduce your debt by using savings or income from a part-time job.

Make a repayment strategy. If you are not in a situation to make a lot of money, federal loans offer income-driven repayment plans that can help keep graduate loan payments low, and you may be able to qualify for loan forgiveness by working in the public sector. Graduate degree holders with high earning potential, such as doctors or MBAs, may be eligible for lower-interest student loan refinancing.

Which graduate degrees are students most likely to borrow?

A medical degree is the most time-consuming and expensive of all graduate degrees. Doctors graduate from medical school with an average debt of $161,772. Lawyers had an average of $140,616 in outstanding student loans, whereas educators have an average of $50,879 in outstanding loans. MBA graduates had the lowest average student loan debt of any degree candidate, with an average student loan debt of $42,000.

State-specific student loan debt

North Dakota, Iowa, and South Dakota have the lowest student debt per borrower; the average student loan debt per borrower in each of these states is less than $31,000. Maryland, Georgia, and Virginia have the highest average student debt per borrower, with debts approaching or exceeding $40,000. Washington, D.C. has the highest total average debt per student at $54,945.

States with the Highest Levels of Student Loan Debt

States with greater populations, predictably, have higher aggregate student loan debt. Texas, Florida, California, and New York are among the top four states in terms of total federal student loan debt held by borrowers. Florida, California, Texas, and New York account for almost 30 percent of all student loan debtors in the United States. Borrowers in these states collectively owe more than $450 billion in student loan debt.

Student Loan Borrowers by Balance Distribution

Over 44 million student loan debtors have debts of $100,000 or less. Over 38 million student loan debtors have debts of $60,000 or less. More than 3.0 million student loan borrowers have debts larger than $100,000, with nearly 900,000 of those borrowers having debts greater than $200,000. $2 is the highest concentration of student loan debt.

Delinquency and default on student loans

According to the New York Federal Reserve, 5% of student loans were in default or 90 days or more past due as of the fourth quarter of 2021. The CARES Act, which was passed on March 27, 2020, changed the reporting status criteria for forbearances, resulting in a considerable decrease from the prior figure of 11.1 percent. Despite the fact that billions of dollars are in default, the data are highly skewed toward a lesser debt group.

You’d expect that debtors with bigger student loan balances would be more likely to default, but that’s not the case.

Borrowers with fewer balances and no college education are the most likely to default

“Defaults are concentrated among the millions of students who drop out without a degree, and they tend to have lower debts,” according to the New York Times. That is the source of the significant student loan crisis. Students who attended a two- or four-year college but did not graduate are trying to locate well-paying jobs in order to pay off their debt.”

Furthermore, graduate students may be better informed about the student loan procedure and choose an IDR plan to prevent default. Borrowers who dropped out or did not finish a degree may be unfamiliar with such choices. These default student loan debt numbers, on the other hand, are deceptive and may provide the wrong impression.

Only 32 people got their debts canceled under IDR programs by 2021

One of last year’s more embarrassing findings concerned the massive mishandling of the IDR program since its inception in the 1990s. To guarantee affordability, these plans base monthly payments on income. Furthermore, the government eliminates the remaining debt after 20 or 25 years. That was essential since the low payments sometimes did not even cover the interest, resulting in negative amortization for many borrowers.

These loans, by having an eventual cancellation, would avoid borrowers from being trapped in an infinite payment loop.

The IDR was great in theory but failed many people who should have benefited from debt forgiveness. Only 32 out of 4.4 million people with at least 20 years of payments had debt erased due to improper loans. Loan servicers have harmed millions of customers through long-term forbearance and misinformation.

The good news is that the administration is taking action to address the mismanagement. The Department of Education committed to addressing the issue in April, promising to erase over 40,000 people’s debts immediately and to grant 3.4 million borrowers three years’ worth of credit toward loan forgiveness.

Can Students Nowadays Work Their Way Through College?

  • As the expense of higher education rises, NerdWallet experts say it’s practically impossible to pay for college while working a minimum-wage job.
  • A student earning the federal minimum wage would need to work 52 hours per week to cover the average cost of attendance at a public university, according to the financial website.
  • Of course, the number of hours would change in California due to the state’s higher minimum wage.
  • The federal minimum wage is currently $7.25, but California’s is $15, which is roughly double the national amount. The minimum wage in Los Angeles is slated to rise to $16.04 in July.
  • The current minimum wage in San Francisco is $16.32.
  • Every second, a student in the United States incurs $2,858 in educational debt.

The quick escalation of the sums due is one of the most surprising student loan debt figures. These rise by about $3,000 per second. As a result, it is not surprising that some early forecasts place student debt above $2 trillion by 2022.

Make a strategy to pay off your school loans.

Now that you know what your monthly budget looks like, you can start planning how you will pay off your student loan debt once and for all. You are doing yourself no favors in terms of interest if you have been paying the minimum amount required each month.

By planning your expenditures with your student loan repayment alternatives in mind, you’ll start making better decisions that will help you pay off your debt faster and more strategically.

What does it mean to be strategic with your student loan debt?

It entails allocating funds depending on need. Many financial gurus advise paying off your highest-interest loans first. Student debt may be your highest burden, therefore the time to act is now. Here are a few ideas to help you pay off your student loans faster.

Submit the FAFSA and think about the payoff

Increases in federal student loan interest rates make it even more necessary to assess college debt repayment and whether whatever debt you incur is worthwhile. Even with higher interest rates, federal student loans are still the best option for financing your education if you require loans. To be eligible for federal, state, and school-based funding, complete the Free Application for Federal Student Aid, or FAFSA.

Submitting the FAFSA permits you to be evaluated for grants and other non-repayable help, such as the Pell Grant. After you’ve used up any non-repayable help, go through all of the federal student loans available to you before considering private student loans. Borrowers are better protected with federal student loans.

The payout of attending college will differ depending on your degree, the cost of tuition, and the amount of debt you incur to fund your education. If the payback isn’t evident, think about alternatives to education or starting at a community college before transferring to a four-year institution to get your bachelor’s degree.

Statistics and Facts About Student Loan Repayment

If you have federal student loans, you have most certainly taken advantage of the national moratorium on federal student loan payments. But it is unlikely to endure forever. Here are some statistics on how students and graduates pay back their student loans.

When will the countrywide moratorium on student loan payments end?

The announced expiration date for the nationwide student loan freeze has been extended several times. However, the hiatus is now scheduled to end on September 1, 2022.

What is the typical monthly student loan payment?

The average monthly student loan payment is $460.

How long does it take the average student loan borrower to repay their loans?

It takes the typical borrower 20 years to pay off their student loan debt.

What is the greatest federal student loan repayment plan for folks who want to be out of debt as soon as possible?

If you want to pay off your student loans as soon as possible, the Standard Repayment Plan is the ideal option. You’ll have a fixed monthly payment with this repayment plan, which assures you’ll pay off your debt in at least 10 years.

Student Loan Statistics: Additional Data

There are also various more data about student loan debt status:

  • In 2018, nearly seven out of ten seniors (65%) who graduated from public and private nonprofit institutions had student loan debt.
  • Based on the average amount borrowed to get a bachelor’s degree, the average student loan debt at public colleges and universities is $30,030.
  • Based on the average amount borrowed to get a bachelor’s degree, the average student loan debt at non-profit private schools and universities is $33,900.
  • Based on the average amount borrowed to get a bachelor’s degree, the average student loan debt at for-profit schools and universities is $43,900.
  • Approximately 16% of student loan debtors are under the age of 25.

Final Thoughts

We looked at the average student loan debt by age as well. According to the Federal Reserve Bank of New York’s age group breakdowns, there are more borrowers under 30 years old than in any other age category. Surprisingly, in terms of percentage growth, the number of borrowers under 30 has not grown as much as it has for the other age groups during the previous 13 years.