As of May 2021, the total amount of student loan debt was approximately $1.7 trillion and there are over 45 million borrowers in the country.
That means there are a lot of us trying to understand and navigate the student loan landscape. How much are we borrowing? And what can we do to decrease the amount we owe?
The College Board found that cumulative debt levels upon graduation—meaning the debt students had accumulated over the four years of undergrad—had risen to $28,800 per borrower for those graduating in 2019 (the latest stats available). And nearly 56% of all graduates carried student loan debt.
How Average Student Loan Debt Has Changed in the Last 10+ Years
It’s no secret that college is expensive and has only gotten more expensive in the last 10 years. According to data compiled by US News, the cost of attending college with in-state tuition at public National Universities increased by 72% from 2008 to 2021.
Over roughly that same period of time (from 2010 to 2020), total outstanding student loan debt grew from $845 billion to $1.7 trillion in order to cover those costs. This student loan debt crisis is taking a financial toll on graduating students, potentially affecting their credit and home-buying prospects.
There is good news, though: the growth of student loan debt is slowing. While the average student loan debt continues to grow slightly, it’s leveled off in recent years. The average cumulative student debt was $23,765 for 2009 graduates. The class of 2018 had a cumulative average of $29,843, which increased slightly less than 1% to $30,062 for the class of 2019, according to US News .
However, Parent PLUS loan debt is on the rise. According to the New York Times , in 2013, Parent PLUS loans accounted for 14% of undergraduate student loan debt to nearly 25% in 2019.
Public vs Private Four-Year Schools Student Loan Debt
The College Board’s annual survey of trends in student aid 2020 found that graduates of public four-year institutions had an average college debt of $27,000, compared to private school borrowers, who graduated with an average debt of $33,700.
It should be noted that numbers for for-profit schools are harder to come by, but what is true across analyses is that students at for-profit schools take out more in student loans and default at higher rates.
Of students at for-profit colleges, 71% borrow federal student loans. Borrowers from for-profit colleges account for about half of all student loan default, despite making up only about 10% of students.
Undergraduate vs Graduate Student Debt
Let’s look at this from a different angle. How does undergrad debt compare to grad school debt? The College Board’s annual survey of student aid trends found that on average, undergraduates took out $6,400 in either subsidized or unsubsidized federal loans in the 2019-2020 school year. That same year, graduate students took out $18,510 in subsidized or unsubsidized federal loans.
Nearly 62% of students borrowed student loans in the class of 2019. Of those, the average student debt for a bachelor’s degree was $28,950, according to The Institute for College Access and Success. But if you are planning to get an advanced degree, prepare for a potential mortgage-sized debt load.
As an example, 75% of people with law degrees have at least $100,000 in student loan debt according to the American Bar Association’s 2020 Law School Student Loan Debt survey. Looking to fix teeth for a living? Dentists graduate school with an average of $292,169 in debt.
The Average Student Loan Debt for Borrowers Under 25
There are about 7.8 million people under the age of 24 with student loan debt. As a group, they owe just over $115 billion, according to the US Department of Education’s Q4 2020 report . The average amount owed per individual is $14,807.69.
The average amount owed per person when you consider borrowers of all ages is $39,351.
Average College Debt by State
When we look at the average student loan debt broken down by school and region, it also becomes clear there is a range of highs and lows across the country.
The Institute for College Access and Success (TICAS) puts together a comprehensive report on national student debt, using numbers self-reported to college guide publisher Peterson’s from thousands of colleges and universities.
The numbers reported by schools vary—with average debt among graduating students ranging from $17,935 to $39,410—but it does allow for a geographic look at the average student loan debt by state.
The highest debt states in 2019, the last year for reported numbers, were New Hampshire ($39,410), Pennsylvania ($39,027), and Connecticut ($38,546). The states where college graduates had the lowest average debt were Utah ($17,935), New Mexico ($20,991 ), and Nevada ($21,254).
How Long It Takes to Pay Off Student Loans
But even as the growth of new student loan debt is slowing, there continue to be outstanding student loan amounts that haven’t yet been paid off—which helps to explain why the total loan balances are hitting record highs.
There are a few other options that extend the repayment term or allow you to repay on an income-driven plan. Many graduates take longer than 10 years to pay back their loans, and around 20% of students default on their loans.
There isn’t a lot of data on exactly how long it takes students to pay off their student loans, partially because it varies based on how big your loan amount is and partially because some numbers count consolidation as loan repayment—when in reality you’ve taken out a new loan with different terms.
The US Department of Education lists the maximum repayment timelines for Direct Consolidation loans, which for borrowers holding between $20,000 and $40,000 in student loan debt is 20 years. Direct Consolidation loans allow borrowers to consolidate their federal loans into a single loan.
But it is worth noting: the sooner you pay off your loan, the more you save in the long run because you aren’t accruing interest for as long. Part of the reason so many students struggle to make payments is that their student loan payments are large in comparison to their incomes.
The interest rate can be a big factor in that. While interest rates on federal student loans are fixed and set annually by the government, interest rates on private student loans can range from 3% to 13%. Use our student loan calculator to figure out how your monthly payments could change at different interest rates.
Refinancing Student Loans With SoFi
Those looking for options to manage student loan payments might consider student loan refinancing. This process involves borrowing a new loan from a private lender. Lenders review applicant credit history and earning potential (among other financial factors) to determine the new loan terms, with a new, hopefully, lower interest rate.
Borrowers who refinance student loans with a private lender may also be able to adjust their repayment term. Extending the term could lower monthly payments but may end up making the loan more expensive over the life of the loan.
Those who want to continue to take advantage of federal loan benefits like income-based repayment may not want to refinance with a private lender, because all federal student loan benefits are lost when a federal student loan is refinanced.
The average student loan debt has increased over the past few years. For the 2018-2019 school year, the average student loan debt for those graduating with their undergraduate degree was $28,800, according to the College Board. There’s no shortage of student loan statistics—there are averages by state, by age group, and by degree type.
Regardless of how much you owe in student loan debt, creating a repayment plan is critical. Qualifying borrowers may consider refinancing to a lower interest rate, which could help them spend less in interest over the life of the loan. Refinancing federal student loans eliminates them from federal borrower protections (like income-driven repayment plans) and may not be the right choice for all borrowers.
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended to December 31, 2022. 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. If you qualify for federal student loan forgiveness and still wish to refinance, leave up to $10,000 and $20,000 for Pell Grant recipients unrefinanced to receive your federal benefit. 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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