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There’s no question that furthering your education can be an expensive endeavor. Almost a third of all American students take on some level of debt to go to college, according to the Federal Reserve.

But students in some majors can expect to pay a significantly higher price than others.

If your goal is to study law, medicine, or veterinary medicine, for example, and you plan to get a graduate degree, you could end up owing five or six times more than the average person with a bachelor’s degree.

Whether you choose your major out of passion or for the potential paycheck — or both — only time will tell if you’ll get the outcome you’re hoping for. In the meantime, it can be a good idea to look at how much you might have to borrow to finance the course of study you’re considering.

Recommended: How to Pay for College

Student Loan Debt in America

How much do student loan borrowers in the United States owe after college?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.58 trillion in the fourth quarter of 2021. That’s nearly triple what the Fed says Americans owed in 2006.

Most of that debt is carried by millennials and Gen Xers. At the end of 2021, adults 35 to 49 had more than $622 billion in student loan debt, according to the U.S. Department of Education’s Federal Student Aid office. Younger adults, ages 25 to 34, owed more than $500 billion.

And the United States isn’t the only country with a high amount of student debt. In England, the value of outstanding loans reached £141 billion (approximately $191 billion in U.S. dollars) at the end of March 2021. The government there forecasts the value of outstanding loans will be around £560 billion (approximately $760 billion in U.S. dollars) by the middle of this century.

In Sweden, the Board of Student Finance has been asked to raise interest rates on student loans to help make up for the millions of dollars that are lost each year when borrowers don’t repay what they owe.

Still, while student loan forgiveness and other reforms are often discussed here and abroad, little is happening so far.

Recommended: Average Student Loan Debt: By Career

Average Student Loan Debt

According to Education.org, the average federal student loan debt balance is $37,113. And if you include private loan debt, the average balance may be as high as $40,904.

Of course, the amount you might borrow (or have borrowed) could vary significantly depending on your major and the degree required to pursue your chosen profession.

The average student loan debt for a borrower with a bachelor’s degree, for example, is about $29,000. But if your major moves you on to a graduate degree, the cost can move on as well — to an average of $71,000. And if you’re thinking about a degree in law or medicine, your debt could be in the hundreds of thousands.

According to research from The Brookings Institution published in 2020, while only 25% of borrowers went to graduate school, those students account for about a half of the outstanding education debt in the United States.

That’s partly because graduate students typically spend at least a few more years in school than undergraduates do. And besides their undergraduate and graduate courses, many professionals (doctors, dentists, veterinarians, etc.) also go through a residency or post-doctoral program that adds to the overall cost of their education.

Federal student loan programs also allow graduate students to borrow more money than undergraduates. Though there’s a $31,000 cap on federal loans for undergraduate students who are dependents, graduate students may be eligible to borrow up to the full cost of attendance through the federal Grad Plus program.

Other factors that affect the amount students end up borrowing can include the cost of living in the state or city where the school is located, whether the school is public or private, and whether the student is paying in-state or out-of-state tuition.

Recommended: What is the Average Student Loan Debt?

Student Loan Debt by Major

When you first start thinking about how to choose your college major, it’s likely you base your top choices on the academic subjects you’ve always been good at or things you’re interested in. Maybe you have a passion for a subject you feel destined to pursue.

If you’re a practical person, you also may have considered what career that degree might potentially lead to, and how much you’d earn if it became your profession.

What you may not have thought about — at least not at first — was how much it might cost you to major in one subject vs. another. Or if you might have to get an advanced degree in your major to actually get the job, or paycheck, of your dreams.

Here’s a look at the average student loan debt for some popular degrees:

Law Degree

$165,000 upon graduating

More than 95% take out student loans

Medical Degree

$241,600 upon graduating

76% to 89% take out student loans

Recommended: What is the Average Medical School Debt?

Dental School

$304,824 upon graduating

83% take out student loans

Nursing

Associate Degree in Nursing (ADN): $19,928

Bachelor of Science in Nursing (BSN): $23,711

Master of Science in Nursing (MSN): $47,321

More than 70% take out student loans.

Recommended: A Look at the Average Cost of Nursing School 

Business Administration

$66,300 (average for undergraduate and MBA student debt)

51% of MBA graduates take out loans

Architecture

$40,000

(% who borrow not available)

Veterinary Medicine

$188,853

83% take out student loans

Pharmacy

$173,561

85% take out student loans

Education/Teaching

$55,800

45% take out loans

Communication/Journalism

Bachelor’s degree: $24,233

Master’s degree: $58,586

(% with loans not available)

Student Loan Debt by State

If it seems as though your neighbors are carrying higher or lower amounts of debt than the U.S. average of $37,113, it might have something to do with where you live. If you have a high concentration of residents with medical or law school debt in your city or state, for example, the average student debt loan might be higher than it is in other parts of the country. If the amount of debt carried is lower than average, it could be because your state offers its students more financial aid.

Here’s what the average student loan debt by state looks like in the U.S., according to EducationData.org . (These numbers refer to federal student loan debt only.)

State	Avg. Student Debt	Residents w/ Student Debt
Alabama	$37,348	12.3%
Alaska	$34,431	9.1%
Arizona	$35,431	12.1%
Arkansas	$33,525	12.7%
California	$36,937	9.8%
Colorado	$37,120	13.2%
Connecticut	$35,448	13.4%
Delaware	$37,338	12.4%
District of Columbia	$55,077	16.9%
Florida	$38,481	11.8%
Georgia	$41,843	15%
Hawaii	$36,575	8.3%
Idaho	$33,100	11.7%
Illinois	$38,071	12.5%
Indiana	$33,106	13.2%
Iowa	$30,848	13.4%
Kansas	$33,130	12.8%
Kentucky	$33,023	13.1%
Louisiana	$34,683	13.7%
Maine	$33,352	13.4%
Maryland	$43,219	13.3%
Massachusetts	$34,549	12.5%
Michigan	$36,295	13.9%
Minnesota	$33,822	13.6%
Mississippi	$37,080	14.6%
Missouri	$35,706	13.3%
Montana	$33,953	11.4%
Nebraska	$32,138	12.4%
Nevada	$33,863	10.9%
New Hampshire	$34,353	13.5%
New Jersey	$35,730	12.6%
New Mexico	$34,237	10.6%
New York	$38,107	11.9%
North Carolina	$37,861	12.1%
North Dakota	$29,446	10.9%
Ohio	$34,923	15%
Oklahoma	$31,832	12.1%
Oregon	$37,251	12.7%
Pennsylvania	$35,804	13.7%
Puerto Rico	$27,607	9.9%
Rhode Island	$32,212	12.7%
South Carolina	$38,662	13.9%
South Dakota	$31,858	12.7%
Tennessee	$36,549	12.2%
Texas	$33,123	12.1%
Utah	$32,781	9.2%
Vermont	$38,411	11.7%
Virginia	$39,472	12.3%
Washington	$35,521	10.1%
West Virginia	$32,272	12.4%
Wisconsin	$32,272	12.1%
Wyoming	$30,246	9.2%

Federal vs Private Student Loan Debt

As these student loan debt statistics show, the rising cost of attending college can be a heavy financial burden for many Americans. And because there are limits on how much students can borrow in federal loans each year, many turn to private student loans to help cover their education bills.

The national private student loan balance now exceeds $140 billion, according to EducationData.org, which says 88.5% of that balance is in undergraduate loans and 11.5% is in graduate student loans.

Private student loans are a pretty small piece of the overall outstanding student loan debt in the United States — about 8.4%. But the number of students taking out private loans is growing. Student loan borrowers owe 71% more in private student loan debt than they did a decade ago, the Student Borrower Protection Center reports.

Recommended: Private Student Loans vs Federal Student Loans

Explore SoFi’s Private Student Loan Options

Since private student loans are not associated with the federal government, repayment terms and benefits can vary from lender to lender. So if you decide to use private student loans to help pay for your education, you may want to take the time to shop for the most competitive interest rates and other loan benefits, and to be clear on what each lender is offering.

Remember: After you graduate, you’ll have to pay back the money you owe — along with all your other bills. And federal loans offer some important protections that you may not get from a private lender, such as the ability to switch to an income-driven plan if you can’t afford your monthly payments or to defer payments if you lose your job. You may want to exhaust all your federal grant and loan options before you consider using a private student loan.

SoFi has a loan to fit the requirements of just about any major you might choose, whether you’re an undergraduate or graduate student, a law school or MBA student, or if your parent is the one doing the borrowing.

Recommended: A Guide to Private Student Loans

The Takeaway

No matter what your major is, these days, there’s a good chance you may have to take on some debt to get the education you need and want.

And the final bill could be substantial: The average federal loan debt balance is $37,113, but if you choose a major that requires a graduate degree, it could be two or three times that amount … or more.

Most student borrowers use federal loans to help pay for their education. But a combination of federal and private loans may be necessary to cover all your costs. If you find you’re in need of extra funds from a private lender, there are plenty of options out there. However, all private student loans are not the same, so it can be helpful to research the best interest rates and repayment terms for your needs.

Learn more about whether a private student loan with SoFi could be the right financial solution for you.

FAQ

How much student loan debt is there in the United States?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.58 trillion in the fourth quarter of 2021.

What is the average U.S. student loan debt per student?

According to Education.org, the average federal student loan debt balance is $37,113. And if you include private loan debt, the average balance may be as high as $40,904.

Who owns most student debt?

The federal government — or, more specifically, the U.S. Department of Education — owns about 92% of all student loan debt in America.

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Photo credit: iStock/FabrikaCr

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Whether you are a new investor or a seasoned trader, it’s common to hear the word “volatility” when discussing the movements of a stock price or index. More volatile stocks tend to have larger swings, both up and down.

However, depending on the context, the speaker may be referring to historical volatility, as in the case of comparing two stocks, or implied volatility, as in the case of discussing options prices. It’s crucial for participants in these markets to understand the difference.

Here’s what you need to know about implied volatility vs. historical volatility.

Historical Volatility Definition

Historical volatility is a statistical measurement of how much a given stock moves up and down. As the name suggests, historical volatility measures a stock’s price as compared to its average or mean. The most popular way to calculate a stock’s historical volatility is by calculating the standard deviation of a stock’s price movements over a period of time.

Investors use historical volatility to get an idea of how likely the stock is to make large movements in its price. A stock with higher volatility is inherently riskier, because there is a bigger chance the stock’s price will drop significantly. Highly volatile investments purchased with leveraged accounts can be even riskier still.

On the other hand, it can also be potentially more rewarding, since there is also a possibility that the stock’s price will make a big jump upward. Stocks tend to generally become more volatile during times of recession or uncertainty.

Investors measure a stock’s historical volatility as a percentage of the stock’s price and not as an absolute number. That makes it easy to compare historical volatility between stocks, even if they have very different values, when assessing investment opportunities. When comparing the volatility of stocks, it’s important to make sure you’re looking at them over the same time period.

Implied Volatility Definition

Implied volatility is another measure of the volatility of a stock. While historical volatility is backward-looking, implied volatility attempts to quantify a stock’s volatility going forward. Implied volatility reflects the prices of the options contracts associated with a particular stock. Options traders usually reference implied volatility with the Greek letter σ (Sigma).

A stock with a higher implied volatility generally has options contracts with higher premiums. This is because there is more uncertainty around the direction of the underlying stock.

Historical vs Implied Volatility

While both implied volatility and historical volatility measure the volatility of a particular stock, they measure it in different ways. Historical volatility reflects the past price movements of a particular stock or index, while implied volatility gauges future expectations of price movements based on the prices of options contracts.Traders use implied volatility when they are determining the extrinsic value of an option.

When to Use Historical vs Implied Volatility

One way to use implied volatility is to look for options whose implied volatility is different from the historical volatility. If an option’s implied volatility is lower than the historical volatility of the underlying stock, that may be a signal of an undervalued option premium.

Comparing Implied and Historical Volatility

Here is a quick summary of the differences between historical and implied volatility:

Historical Volatility	Implied Volatility
Calculated using the historical prices of a stock or index	Determined indirectly based on the prices of options contracts
Used primarily for stocks or indexes	Used primarily for options
Measures past performance based on historical data	Projects future performance, representing an indicator of future volatility

How to Use Implied and Historical Volatility Together

Because implied volatility and historical volatility measure different things it can be useful to employ them both. The historical volatility of a given stock or index will measure how much the price has historically moved, both up and down. If you’re interested in investing in options for a stock, you can look at how its historical volatility compares to the implied volatility denoted by the prices of its options contracts.

One way that you can incorporate some of these ideas into your trading strategies through a volatility skew. A volatility skew depends on the difference in implied volatility between options contracts that are in the money, at the money and out of the money.

Another relevant concept when it comes to implied volatility is a volatility smile, a graphic representation of the strike prices and the implied volatility of options with the same underlying asset and expiration date.

The Takeaway

Options traders often look at both historical and implied volatility when determining their options trading strategy. You may also use these tools while investing, or you might look at other factors to evaluate potential investments.

If you’re ready to start trading options, one way to start is with SoFi’s options trading platform. This platform offers an intuitive and approachable design where you can make trades from the mobile app or web platform. Plus, you can reference a library of educational content about options if questions come up along your investing journey.

Pay low fees when you start options trading with SoFi.

FAQ

How is implied volatility calculated from historical volatility?

The historical volatility of a stock or index reflects the changes in historical stock prices. It is often, but not always, calculated as the standard deviation of a stock’s price movements. Implied volatility is not something directly calculated — instead, it is implied based on the prices of options contracts for the underlying stock.

Is there a difference between implied and realized volatility?

Realized volatility is another name for the historical volatility of a stock. So while implied and realized volatility both measure how volatile a stock is, they have different definitions, and investors use them in different ways.

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Photo credit: iStock/kupicoo

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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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