A visual timeline of student loans

A Visual Timeline of Student Loans: Where We’ve Been and Where We’re Headed



More Americans than ever are taking out student loans to invest in their futures. And that’s leading to…a huge amount of debt across the nation. $1.3 trillion in fact. This year alone, college grads who have their bachelor’s degrees face an average of $37,000 in student debt. And, as of July, over seven million borrowers are in default.

So how to solve it all? Let’s start at the beginning. Scroll through the visual timeline below to see the highlights and lowlights of the past 80 years in student loan history.

Rest assured, there is definitely a light at the end of the tunnel (er…timeline).

The Indiana Student Financial Aid Association is formed

1935 – The Indiana Student Financial Aid Association is formed. The seed for government student aid is officially planted.

1944The Servicemen’s Readjustment Act (the GI Bill) is passed in 1944. Providing federal funding for WWII veterans to attend college.

Related: How and When To Combine Federal and Private Student Loans

1952The Veterans Readjustment Assistance Act is passed, extending GI Bill benefits to Korean War veterans.

The Federal Perkins Loan Program is enacted

1958 – Amongst growing fears that Soviet Russia is outpacing the U.S. in education, the Federal Perkins Loan Program is enacted. This legitimizes federal funding of higher education through low-cost student loans.

1965The Higher Education Act of 1965 (HEA) is passed, increasing federal funding to universities. The Pell Grant Program is the largest of six programs authorized under the HEA.

Americans with degrees up 22% since 1940

1970 – The share of Americans who have received degrees since 1940 is 22.3% (8.2% women/14.1% men), up 13% over 30 years.

1973 – The Student Loan Marketing Association (Sallie Mae) is established to help create more low-interest loans in support of the HEA.

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1980 – The average cost of one year of college is $8,756. The maximum Pell Grant award reaches $1,750. (We did the math: that means individuals are now responsible for about $7,006 a year.)

Consolidation of Stafford Loans, PLUS Loans, and Federal Perkins Loans begins

1992– President George H.W. Bush signs legislation allowing the consolidation of Stafford Loans, PLUS Loans, and Federal Perkins Loans. One of the main drawbacks? The consolidation leads to an increase of about 0.125% in interest.

Recommended: What is Refinancing Vs. Consolidation?

1998 – The fixed interest rate for government student loans hits an all-time high: 7.46%.

2001 – The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is passed, making all interest paid on student loans deductible — but subject to dollar limits.

2007The College Cost Reduction and Access Act is passed. Improved benefits include Pell Grant increases, lower interest rates, income-based repayment (PAYE), and public service loan forgiveness.

Federal and private student loan debt now surpasses credit card debt

2010– The average cost of one year of college rises by 600% since 1980. Federal and private student loan debt now surpass credit card debt at $829,785 billion.

SoFi is born in 2011

2011– State governments cut college funding and increase tuitions. Students in at least 43 states feel the sting. SoFi (and the concept of refinancing student loans at lower rates for hard working professionals) is born.

Home ownershp and student loans

2012– The share of people age 25 with student debt grows to 43% (from 25% in 2003). And for the first time in 10 years, there are more homeowners without a history of student loans than with a history of these loans.

Read Next: 10 Questions to Ask When Choosing a Student Loan Refinance Lender

2013 – Student loan debt crosses the $1 trillion mark, tripling what it was in 2003.

2014 – The average cost of tuition, room, board and fees at a four-year college is $23,872. The maximum Pell Grant award is $5,730.

American student loan debt exceeds the GDP of Australia, Ireland, and New Zealand combined

2015 – American student loan debt exceeds the GDP of Australia, Ireland, and New Zealand combined. President Obama announces the Revised Pay as You Earn (REPAYE)program, capping student loan payments at 10% of borrower’s income and forgiving the debt after 20 years.

2015 – Employers start to recognize the significance of the student debt crisis. Three percent of U.S. companies offer student loan assistance as a benefit.

2016 – Student loan debt is a focus of the presidential election. President Elect Donald Trump reveals a single student loan repayment plan capped at 12.5% of a borrowers’ income and suggests borrowers would see their student debt forgiven after 15 years of making full payments.

Over 600 companies partner with SoFi at Work

2016 – Over 600 companies partner with SoFi at Work to offer student loan contributions and student loan refinancing as benefits for their employees.

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ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than half a million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit SoFi.com.


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