Some of today’s luxury splurges include African photo safaris, the latest phone, fancy soap … and college? According to the CollegeBoard’s 2019 Trends in College Pricing report, over the past decade, American undergrads have watched their tuition bills climb an average of 2.2% per year above and beyond inflation, which amounts to about $200 more per year.
And during the 2019-20 school year, the average cost to attend a public, four-year college, with in-state tuition including room and board and other fees, came in at just over $21,900 .
Multiply that times four years, add out-of-state or private school tuition, or look at an advanced degree, and it’s not surprising that as many as 42.2 million students and their parents borrowed money for school in Q3 of 2019.
You might be one of them—or have a family member or close friend who is—but how much do you really know about student debt? After all, it can rank right up there with politics and religion on the list of topics that no one wants to bring up.
Any idea which states have the highest student loan balances? Or how much Americans owe in total on their student loans? What about how common it is for people to stop making payments?
We’ve gathered those answers and more, and the numbers may surprise you. Because whether you see it as a private struggle or a national crisis, student loan debt is a big deal.
1. Americans currently owe over $1.6 trillion on their student loans.
That was the cumulative student loan balance among American consumers as of February, 2020. A decade ago, the figure was less than half as much: $695 billion . Student loans are now the largest form of consumer debt in the U.S. other than mortgages—exceeding car loans and credit card debt.
Want some good news? That seemingly insurmountable number is starting to get some attention. Presidential hopefuls are focusing their 2020 campaigns around eliminating student debt, and billionaires are paying it forward by paying off student debts at their alma maters.
And it’s not just private individuals. After the IRS ruled that Abbott Laboratories could contribute up to 5% of an employee’s salary to their 401(k) if they’re putting at least 2% of their compensation toward student loans, it opened the door to making student-loan repayment a recruitment tool and employment benefit.
2. The average student loan balance is more than $35,000.
The average student-loan borrower today owes around $35,359 , a number that’s steadily on the rise—up 2% since Q1 of 2018.
When divided up by generation, Gen Xers carry the highest balance at just under $40,000 . Boomers come in second, with balances averaging around $34,703, and Millennials were right behind them. Conversely, Gen Z debt-holders have balances around $12,500.
3. Individual debts vary widely.
The average debt is just that—the average. Recent figures show that student-loan balances are as varied as age, state and program statistics. The majority of borrowers owe between $10,000 and $25,000, but total balances range from less than $1,000 to more than $200,000.
This may not come as a surprise when compared to the total costs of attending college. For the 2018-19 school year, Harvey Mudd College in California topped the list of most expensive schools at around $75,000 a year for tuition and fees. On the other hand, a handful of schools, including Berea College in Kentucky, offer free college tuition.
4. Current student debt varies widely by state and college.
While not technically a state, Washington, D.C. topped the list of states with the highest student debt, with an average of $55,729 —a full $15,000 higher than the next highest state, Georgia, which averaged $40,692. The bottom of the list (or perhaps the top, depending on your point of view), includes Wyoming, North Dakota, South Dakota, and Iowa, all with less than $30,000
Likewise, the program students pursue can have a huge impact on the amount of student debt facing graduates. The cost of graduate school can vary widely by program. Specialized degrees—medicine, law, or pharmacy, for example—could leave students facing even higher debt burdens, sometimes upwards of $100,000.
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5. Percentages are going up, everywhere.
No matter where a state-ranked on the list, every single one saw an increase in the average student loan debt from 2018 to 2019, from 4.0% in Idaho to 9.4% in Mississippi.
The number of individual borrowers also went up across the board, including a TEXT increase in the number of student loan borrowers aged 62 and older.
6. Americans with student debt are likely to have multiple loans.
The Department of Education currently contracts a few different loan servicers . The federal student loan will be assigned to a loan servicer when it is disbursed. For borrowers with multiple student loans, it is possible that they’d have multiple loan servicers. That could be a lot to juggle, and one reason borrowers may consider federal student loan consolidation.
And more than 6 million federal student loan borrowers have at least one loan in deferment or forbearance, which are two different ways of delaying repayment. (Here’s a guide to some pros and cons of each.)
7. The number of borrowers defaulting on their student loans is in the six figures.
Risk factors for student loan default can include having other forms of debt, such as a credit card balance, car payment or mortgage. And defaulting on loans can also put borrowers at risk for having other bills, such as medical expenses, end up in collections as well.
What’s to be done? Even if you just stop paying on your student loans, they won’t go away. And in the meantime, interest will continue to accrue and capitalize (along with penalties and other downsides to nonpayment, like being sent to collections).
You can take a look at current interest rates to see if refinancing student loans makes sense for your situation. Refinancing won’t be right for everyone, but it can be worth considering. Know that if you refinance federal student loans, they’ll be eliminated from federal benefits and protections like income-driven repayment plans or Public Service Loan Forgiveness.
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IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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