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Accrued interest represents the interest that accumulates in between payments on a financial product. Accrued interest can apply to both lending and investment products, ranging from home loans and credit cards to bonds or savings accounts.

Accrued interest is different from regular interest, and it’s an important concept to understand.

What Is Accrued Interest?

When you are investing and earning interest, you’ll probably encounter accrued interest. And in the opposite situation, if you borrow money and owe interest payments, you’ll also deal with accrued interest.

This type of interest accrues in between payments. For instance, if you have a credit card balance of $1,000, and you make a partial payment on the 30th of the month, the remaining balance and any new charges will begin to accrue interest. It will be due on the 30th of the following month.

Think of accrued interest as interest that is building up, bit by bit, until that payment is made. In the case of an investment like bonds, in which you’re essentially loaning money to an entity like the government or a company, the accrued interest is interest earned on the money you invested that is eventually paid to you.

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How Does Accrued Interest Work?

It’s possible to owe accrued interest on a variety of lending products, like credit cards and loans. It’s also possible to earn accrued interest on certain investing products and savings accounts.

Whenever an individual borrows money, they owe interest. They are paying to use that money. On the flip side, when they are investing and giving a financial institution, government agency, or company money to borrow for an investment, such as a bond, then the individual is owed interest.

Accrued Interest When Borrowing Money

When you borrow money, with an installment loan, for instance, interest typically accrues daily. At the end of the month, the accrued interest is added to the total monthly payment amount.

With credit cards, unless you pay your balance in full every month, the same daily accrual happens after the cardholder makes a charge with their card. The interest is building up as the month goes on. How much interest accrues depends on the balance and the interest rate.

Accrued Interest When Saving

Accounts that earn interest, such as certificates of deposits (CDs) and high-yield savings accounts, also often accrue interest daily. The amount of interest accrued is based on the account’s average daily balance. An exception to that is bonds, which generate a fixed interest payment on a quarterly, semiannual, or annual basis.

How to Calculate Accrued Interest

How interest accrues varies by the lender and product that’s generating the interest, which could be a loan, a line of credit, an investment product, or a bank account such as a savings account.

Example of Accrued Interest When Borrowing

To calculate how much interest will accrue daily with a credit card, for example, an individual needs to divide their APR (annual percentage rate) by 365 (for the number of days in a year). Then, they would multiply their current credit card balance by their daily rate. So if a credit card has an APR of 24.37% with a balance of $500, the calculation for how much interest accrues daily looks like this:

24.37 / 365 = 0.067%

$500 x 0.00067 = $0.34 interest that accrues daily

To calculate the monthly interest charge, multiply the daily rate by the number of days in the credit card billing cycle. So if there are 30 days in the billing cycle the calculation would look like this:

$0.34 x 30 = $10.20 in interest

Although credit card interest accrues daily, the total amount accrued is typically not added to your balance until the end of the billing cycle. So if you pay your balance in full by the due date, you can avoid paying accrued interest.

Example of Accrued Interest When Saving

To calculate accrued interest on a savings account, for example, take your yearly interest rate, which banks generally list as an APY, or the percentage of total interest you can earn on your account per year. To find the monthly interest rate, divide the APY by 12 (for the number of months in the year). So, if the APY is 5%, the calculation would look like this:

5 / 12 = 0.416% monthly interest rate

Next, to calculate how much interest you will actually earn on your money, you need to know if the interest is simple interest vs. compound interest. Most savings accounts use compound interest, and it is calculated depending on how often it compounds, such as monthly.

To determine how much annual interest you’ll earn on a balance of $1,000 in your savings account, the formula is:

P(1 + R / N)˄NT

P is the principal amount (the $1,000), R is your APY (calculated in decimal form), N is the frequency of compounding, which is monthly, and T is the amount of time, which in this case is 1 for one year. It would look like this:

1,000(1+ 0.05 / 12)˄12 x 1 = $1,250

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Accrued Interest vs Regular Interest

Accrued interest is different from regular interest. Accrued interest typically indicates interest charges that have accumulated but not yet been paid. Perhaps you have heard the term in this context with student loans: The interest may start accruing (adding up) when the loan is disbursed, but it could only become due at your studies’ completion. You may not be paying the interest just yet, but you can know the interest will be assessed.

Regular interest refers to the interest earned on, say, a home loan. Your payment plus interest is due on a certain date and is not accruing day after day or varying. The “regular interest” involves a known principal and interest rate, as well as a constant monthly payment that is due every month.

Why Is Accrued Interest Important?

Accrued interest shows how interest that an individual owes or is owed adds up. For example, with bonds, it may help you understand the interest that’s accruing so you can make sure you are earning the right amount. Or, if you have borrowed money, you can look at how the accruing interest could add to the amount you owe, which might, in turn, help you manage your money.

In the case of a credit card, if an individual sees how long it will take to pay off a credit card balance over a year or two, they could crunch the numbers on how much interest they will accrue during that time. They may find that paying the debt sooner could save them a lot of money, and then work to create a budget to help them pay down what they owe.

Understanding how that interest builds up is a valuable tool. By better comprehending how much you owe or are owed, you can manage your money and work to enhance your financial health.

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FAQ

Is accrued interest good or bad?

Accrued interest isn’t necessarily a bad or good thing. If someone borrows money, they may not enjoy paying accrued interest, but it is a part of their lending agreement. On the other hand, if someone earns accrued interest on investments or savings, they’ll probably consider it a good thing.

Why do I have to pay accrued interest?

Paying accrued interest is more often than not necessary when someone borrows money. Those payments are required by lenders in exchange for lending money to consumers.

What is the difference between interest and accrued interest?

Regular interest represents the payment made in exchange for borrowing money or as a form of income earned from an investment. Accrued interest represents the amount of interest that builds up in between payments.

How do you avoid accrued interest?

When an individual enters a borrowing agreement, they need to pay any interest they accrue. That said, there are ways to avoid paying accrued interest altogether or to minimize accrued interest payments. For instance, pay your credit cards in full. When you pay the balance in full, you won’t have to pay any accrued interest.

Also, to minimize how much accrued interest you owe on a loan, you can make additional payments. Paying down the principal faster will lower how much interest accrues on a monthly basis. You may even be able to pay off the loan early, which also helps avoid more interest accruing.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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3.60% APY
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

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If a student has goals of pursuing a career as a teacher, they may find that the Teacher Education Assistance for College and Higher Education (TEACH) Grant can help them meet their goals and reduce their educational expenses. The TEACH Grant is a form of federal financial aid that is focused on helping those pursuing a career in teaching pay for their college expenses.

As part of the TEACH Grant, recipients are required to complete a teaching service obligation in order to get the grant. If this obligation isn’t completed, the grant will be transitioned into a loan that will need to be repaid with interest.

Keep reading for more information on the TEACH Grant, including how it works, pros and cons of the TEACH Grant, and how to apply.

What Is a TEACH Grant?

The TEACH Grant is a federal financial aid program designed to help students pursuing teaching careers pay for college expenses. In order to receive a TEACH Grant, applicants have to agree to teach a subject that is considered “highly needed” in a low-income area with a shortage of specific subject teachers. These schools can be elementary and secondary schools.

Grant awards are up to $4,000 a year when the recipient is in school. Once they start working, they will be paid their normal salary without the addition of any grant funds.

TEACH Grants are eligible for multiple subject areas, including:

•   Bilingual education and English language acquisition

•   Foreign language

•   Mathematics

•   Reading specialist

•   Science

•   Special education

•   Any other field that has been identified as high-need by select governing agencies

After graduating, recipients have to teach at a low-income school or educational agency for a minimum of four years. This four-year teaching requirement must be completed within eight years of the recipient’s graduation.

Recommended: FAFSA Grants & Other Types of Financial Aid

TEACH Grant Eligibility

The TEACH Grant comes with certain eligibility requirements, including:

•   Student must be eligible for federal student aid programs

•   Student has to be an undergrad or graduate student

•   The recipient’s school has to participate in a TEACH Grant-eligible program of study

•   Student has to be enrolled in one of these eligible programs

•   Recipient must score above the 75th percentile on one or more portions of a college admissions test or has to maintain a cumulative grade point average of 3.25 or higher

How the TEACH Grant Works

Students who qualify for the TEACH Grant program may receive up to $4,000 a year in funding if they are in the process of completing — or one day plan to complete — the coursework required to start a teaching career.

In order to qualify for a TEACH Grant, the student has to sign a TEACH Grant agreement to work full-time as a teacher for four years at an elementary or secondary school or educational service agency that serves low-income students. They also need to teach in a high-need field and have to finish their teaching obligations within eight years after they graduate from or stop being enrolled at the institution of higher education where they received a TEACH Grant.

Do You Have to Pay It Back?

If the recipient fulfills all service obligations of the grant, they won’t have to repay their TEACH Grant. However, if they don’t fulfill the TEACH Grant requirements, then all TEACH Grants they received will be converted to Direct Unsubsidized Loans that they must repay in full. They will be charged interest starting from the day of their TEACH Grant disbursement.

Can It Be Used for Living Expenses?

The TEACH Grant is intended to fund coursework (up to $4,000 annually) for students who are in the process of or will one day complete the coursework required to begin a teaching career. Consider consulting with the financial aid department of the school the student is attending to see if these funds can also be used for living expenses.

Pros and Cons of a TEACH Grant

Like any program, the TEACH Grant has some unique advantages and disadvantages associated with it.

Applying for a TEACH Grant

The TEACH Grant application is a part of the Free Application for Federal Student Aid (FAFSA®). Students can apply for the TEACH Grant when they submit their FAFSA. Some grants may have limited funding, so it’s generally recommended that students submit the FAFSA earlier rather than later. When the student receives their financial aid offer, they’ll find out if they received a TEACH Grant.

Students must continue to apply for the TEACH Grant each year by submitting the FAFSA annually. They will also be required to complete TEACH Grant counseling and sign a new Agreement to Serve every year.

Not all schools participate in the TEACH Grant, so it’s helpful to contact the school’s financial aid office to find out if they participate in the program and to learn what specific areas of study are eligible for the program.

Alternative Forms of Funding

If a student doesn’t qualify for the TEACH Grant, finds it is not a good fit for their needs, or knows that they don’t want to complete the service obligations, these are some other options they may have for pursuing funding to help pay for college.

Scholarships

When a student receives a scholarship, they don’t have to repay those funds. It’s worth applying for multiple smaller scholarships, not just big ones. Those smaller scholarships can really add up.

Recommended: The Differences Between Grants, Scholarships, and Loans

Other Grants

Like scholarships, generally students don’t have to repay grants for college (unless the grant has obligations like the TEACH Grant). A student’s financial aid office can help point them in the direction of available grants and filling out the FAFSA annually can help them qualify for other federal grants, such as the Pell Grant.

Recommended: FAFSA Guide

Federal Student Loans

Federal student loans are funded by the U.S. Department of Education and there are a handful of different types of federal loans available to both undergraduate and graduate students. To qualify for federal student loans, students have to fill out the FAFSA each year. Federal student loans generally have better interest rates and terms than private student loans and they come with unique federal protections.

Private Student Loans

Students can borrow private student loans to help fill the gaps that scholarships, grants, and federal student loans leave behind. As mentioned, private student loans may not offer the same benefits as federal student loans, and for this reason, they are generally considered an option only after other funding resources have been exhausted.

Recommended: Guide To Private Student Loans 

Part-Time Work

If students are looking to avoid taking on student loan debt or want to lighten their student loan load, they could work part-time to help cover higher education costs and living expenses. There are often on-campus jobs designed to help college students balance their school work and their need to earn an income.

The Takeaway

Paying for college is expensive and a TEACH Grant can help soon-to-be teachers pay for the cost. That being said, the service obligations of this grant won’t appeal to all students and they may find they need to pursue alternative funding, including federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Is the TEACH Grant worth it?

Each individual needs to consider carefully if the service obligation attached to the TEACH Grant makes the $4,000 in financial assistance worth it to them. If they don’t want to live or teach in an area that services low-income students, they may find this program isn’t a good fit.

Do you have to pay back a TEACH Grant?

Recipients may have to pay back their TEACH Grant if they don’t meet the full requirements of their service obligation. If a recipient failed to meet these obligations, the grant funds they received through this program would be converted to Direct Unsubsidized Loans that have to be repaid in full with interest charges.

What does TEACH Grant stand for?

The acronym TEACH of TEACH Grant stands for Teacher Education Assistance for College and Higher Education (TEACH).

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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A personal loan is a flexible lending product that can be used for anything from covering the cost of a home repair to consolidating high-interest debt. While there’s no universally required credit score for a personal loan, you generally need a score of at least 610 to qualify, and an even higher score to get a lender’s best rates.

That said, some lenders offer personal loans for no credit, and even for bad credit. To make up for the increased risk, however, they will typically charge high interest rates.

Read on for a closer look at the minimum credit score for a personal loan, how your credit score can impact loan amounts and interest rates, plus other factors lenders look at when considering an applicant for a personal loan.

What Personal Loans Are and How They Work

A personal loan enables you to borrow a specific amount of money to use in virtually any way you like — unlike a mortgage or auto loan which is earmarked for one specific purpose. Personal loans are offered by banks, credit unions, and online lenders and are generally unsecured (meaning you don’t have to pledge an asset to secure the loan).

Common uses of personal loans include home renovations, vacations, weddings, car/home repairs, medical expenses, moving expenses, major purchases, and credit card consolidation.

Once you get approved for a personal loan, you receive the funds in one lump sum up front then repay the money (plus interest) in monthly installments over a set period of time, called the loan term.


💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

What You Need to Qualify for Personal Loans

These are a few factors lenders take into consideration when deciding whether or not to offer you a personal loan, as well as how much to offer and at what rate. Here’s a look at what you may need to qualify.

Credit Score

A credit score is a three-digit number (typically between 300 and 850) designed to predict how likely you are to pay a loan back on time based on information from your credit reports. There is no universally set minimum credit score for personal loans but many lenders require applicants to have a minimum score of around 620. To get approved for a lender’s lowest rates, however, you may need a credit score closer to 690.

That doesn’t mean borrowers with lower scores or thin credit are out of luck. Some lenders offer personal loans to applicants without any credit history at all. There are also personal loans on the market designed for applicants with poor or bad credit. Keep in mind, though, that these loans often come with high rates and less-than-favorable terms.

Debt-to-Income Ratio

Lenders will also look closely at an applicant’s debt-to-income (DTI) ratio, which measures the percentage of a person’s monthly income that goes to debt payments. You generally want your DTI to be as low as possible because that indicates that your income is well above what you need to cover your monthly expenses.

If you’re applying for a personal loan, lenders typically want to see a DTI of 35% to 40% or less. A lender might allow a higher DTI, however, if you have a strong credit score or other compensating factors, like enough money in your savings account to cover several months of living expenses.

Income

To make sure that borrowers have the cash flow to repay a new loan, lenders typically have minimum income requirements for personal loans. Income thresholds vary widely by lender — some require applicants to earn at least $45,000 per year, while others have a minimum annual income requirement of just $20,000. Lenders don’t always disclose their income requirements, so you may not be able to discover these minimums before you apply for a personal loan.

Lenders see your income by looking at your monthly bank statements, last two years of tax returns, and pay stubs. Some lenders also require a signed letter from an employer. If you are self-employed, you can provide tax returns or bank statements to show proof of income.


💡 Quick Tip: With average interest rates lower than credit cards, a personal loan for credit card debt can substantially decrease your monthly bills.

Personal Loan Options by Credit Score

When it comes to having the right credit score for a personal loan, there is no one set score that disqualifies someone from getting their hands on one. That said, having a FICO® Score in the good range (670-739) or higher gives applicants the widest range of lending opportunities and the most favorable interest rates. Take a closer look at how different FICO credit score ranges can affect lending opportunities.

Exceptional

An exceptional credit score qualifies applicants for the widest variety of personal loan options, the most favorable interest rates, and larger loan amounts.

Very Good

Having a very good credit score qualifies applicants for most if not all of the same rates and lending opportunities as exceptional applicants.

Good

Having a good credit score puts a borrower near or slightly above the average of U.S. consumers, and most lenders consider this a good score to have. Applicants shouldn’t struggle to find a personal loan, but they may not be approved for the lowest interest rates.

Fair

Because a fair credit score is below the average score of U.S. consumers, many lenders will approve loans with this score, but rates and terms might not be as desirable as they are for higher scores.

Poor

A poor or “bad” credit score is well below the average score of U.S. consumers and demonstrates to lenders that the applicant may be a lending risk, which greatly limits the applicant’s borrowing options. If they do qualify for a personal loan they likely can expect to be approved at high interest rates.

Alternatives to Personal Loans

If your credit score makes it difficult to qualify for a personal loan, you may want to explore alternative lending options. Here are some to consider.

•   Credit card cash advance: Consumers with credit cards may be able to request a cash advance from their credit card, which can make it easy to get access to cash quickly. These cash advances typically come with higher interest rates than a regular credit card purchase.

•   Peer-to-peer loans: There are some web-based lending sites that offer some flexibility in qualification requirements. Since these sites are not lenders, and more like matchmakers, they may help you find an investor who is willing to look at other factors besides your credit score.

•   Cross-collateral loans: If you already have a loan secured by collateral with a lender (such as auto loan or mortgage), you may be able to qualify for another loan with the same lender using that same collateral. However, not all lenders allow cross-collateral loans. And there are risks involved for borrowers. To have a lien released from the asset used as collateral, you typically need to pay both loans in full.

Personal Loan Rates From SoFi

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Is a different credit score required for loans of different sizes?

Generally, the higher your credit score, the larger the loan you can qualify for. Maximum amounts for personal loans range from $500 to $100,000. If you have strong credit, you may qualify for a larger loan than you need. Be sure to consider how much you can afford to repay each month before deciding what size loan to take out.

Can you get a personal loan without having a credit score at all?

There are some personal loans on the market with no credit check. Since the lender can’t rely on your credit history, they will typically focus on other indicators of your ability to pay back the loan, such as your income, employment history, rental history, and any previous history with the lender.

When applying for a personal loan with no credit check, you’ll want to carefully weigh the benefits against the costs. Lenders will often charge higher interest rates and impose more fees to lessen their risk.

Can getting a personal loan affect a credit score?

Getting a personal loan can affect credit scores both positively and negatively. Applying for a personal loan typically results in a hard credit inquiry, which may cause a small, temporary drop in your credit score. On the flip side, taking out a personal loan can have a positive impact on your credit by increasing your credit mix. Making on-time payments can also improve your credit profile. (Late payments, however, can have a negative impact on your credit.)

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Student Loan Debt Statistics in 2024

Pursuing higher education is a worthwhile act no matter the cost, but the cost does play a role. Student loan debt statistics point to a total outstanding balance of $1.745 trillion.

Knowing how much student loan debt is potentially on the way can help students and their parents better prepare to manage the costs of higher education. So, how much student loan debt is normal? Let’s take a look at some statistics about student loan debt that can shed some light for potential borrowers.

Overview of Student Loan Debt in America

Before we dive into American student loan debt statistics, it’s important to note that these numbers are just averages. How much student loan debt someone stands to accumulate depends on many different factors such as school choice, living arrangements, and the type of student loan they take out.

Total Outstanding Student Loan Balance

Let’s start our examination of statistics on student loan debt in America by getting an idea of the bigger picture. As noted earlier, American borrowers amassed over $1.745 trillion worth of student loan debt as of June 2024, according to the Federal Reserve.

Average Student Loan Debt per Borrower

The College Board found that as of March 2023, 32% of federal loan borrowers had debt under $10,000. Another 21% held student loan balances between $10,000 and $19,999, and 22% held balances between $20,000 and $39,999.

Student Loan Debt by Education Level

The type of degree a student pursues can influence how much they spend on their education and how much they need to borrow. These statistics for student loan debt by degree can help students determine how far they want to take their education or how much they need to save to avoid student loan debt based on their degree goals.

Bachelor’s Degree Debt Statistics

Many students choose to start and stop their higher education journey with a bachelor’s degree.
For the 2021-22 school year, 51% of bachelor’s degree recipients from public and private nonprofit four-year institutions graduated with debt, averaging $29,400 per borrower.

Among public four-year institution graduates, 49% had federal loans with an average debt of $20,700, while 52% of private nonprofit institution graduates had federal loans, averaging $22,200.

The average private student loan debt is $34,600 per borrower at public four-year institutions and $44,600 at private nonprofit institutions.

Master’s Degree Debt Statistics

Once students choose to pursue a degree higher than a bachelor’s, the student loan debt begins to mount. For students in class of 2019-20, 13% of master’s degree recipients borrowed $100,000 or more to finance their undergraduate and graduate education.

Recommended: How to Live with Student Loan Debt

Doctoral Degree Debt Statistics

A doctoral degree is another option students have for continuing their college education. Like the master’s students, 13% of doctoral degree recipients needed to borrow $100,000 or more to cover the total costs of their college education.

Repayment Challenges and Delinquency Rates

Based on how much student loan debt borrowers have on average, it’s easy to see why some borrowers may struggle with repaying their student loans on time. A delay in payments can lead to delinquency. Student loan delinquency occurs when a borrower fails to make a scheduled payment on their loan by the due date. If the payment is late for an extended period, the loan can default, leading to more severe financial consequences, such as a hurt credit score or the debt entering collections.

Percentage of Borrowers in Delinquency

How many borrowers find themselves struggling with student loan payments? In October 2023, student loan payments that were paused during the pandemic resumed. According to the Department of Education, at that point about 30% of borrowers were past due on student loan payments (this accounts for about $290 billion in loans).

Factors Contributing to Delinquency

Avoiding delinquency is easier when the borrower understands what it means to be delinquent on a loan account. If a borrower fails to make payments on time (whether this is payment number one or the final one), the loan eventually falls into default.

Many borrowers struggle to keep up with student loan payments while juggling other important expenses like housing, groceries, and transportation. With federal student loans, it’s possible to sign up for a repayment plan based on your income (and to enjoy other perks like student loan forgiveness programs). These income-driven repayment plans can make it easier to stay on budget, as they tend to result in smaller monthly loan payments.

A word of warning — income-based repayment plans often mean a longer loan term, which leads to the borrower paying more in interest overall. Whenever possible, paying off a student loan early can lead to major interest savings.

Private student loan lenders tend to be less flexible when it comes to repayment, but if a borrower is struggling to make payments on time, it’s always a good idea to ask for support.

Impact of Student Loan Debt on Life Milestones

When a borrower has to manage student loan debt payments, their monthly budget has less room in it to support their other financial goals — many of which can affect when they can achieve certain important life milestones.

For example, the National Association of Realtors found that 40% of consumers with student loan debt don’t have an emergency fund of $500. It’s easy to see how that level of financial strain can push back meeting goals like buying a home or getting married.

Homeownership Rates

Speaking of buying a home, 46% of student loan borrowers delayed moving out of a family member’s home after college, and more than half (51%) put their goals of buying a home on hold.

Delayed Marriage and Children

Family planning in particular becomes more tricky when navigating repaying student loan debt. Because of their student loan debt burden, borrowers reported delaying:

•   Having a long-term partner (12%)

•   Getting married (12%)

•   Starting a family (14%)

•   Adding to their existing family (10%)

Retirement Savings and Planning

Retirement may feel eons away to college students and new graduates, but it’s never too soon to start saving for a happy retirement. Unfortunately, 26% of student loan borrowers reported they haven’t been able to afford to contribute to a retirement account at all.

The Takeaway

Student loan debt doesn’t need to scare anyone away from pursuing higher education if that is something they dream of pursuing. That being said, knowing what that debt burden can look like can help students make more strategic decisions about where they go to school, how much they borrow, and how they plan to pay it off.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

What is the average student loan debt for bachelor’s degree holders?

Over half (51%) of bachelor’s degree recipients from public and private nonprofit four-year institutions have student loan debt, with an average debt of $29,400. Specifically, graduates from public four-year institutions had an average federal debt of $20,700, while those from private nonprofit institutions averaged $22,200.

Which degree level tends to have the highest student loan debt?

Borrowers who pursue a professional degree tend to borrow the most. According to the Education Data Initiative, the major with the largest median debt is Doctor of Pharmacy at $310,330.

How do student loan debt statistics vary by region or state?

Student loan debt statistics show significant variation by region and state. For instance, in New Hampshire, the average student loan debt is $39,928, with 70% of borrowers having debt, while in Utah, the average is $18,344, and 39% of borrowers carry debt.

SoFi Private Student Loans
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About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.