Report Highlights. Student loan debt in the United States totals $1.75 trillion and grows 6 times faster than the nation’s economy.*
- 43.2 million student borrowers are in debt by an average of $39,351 each.
- The outstanding Federal Loan Portfolio is over $1.59 trillion.
- Approximately 42.9 million Americans with federal student loan debt each owe an average $37,105 for their federal loans.
- More than 35 million of these borrowers qualified for general student debt relief under the CARES Act of 2020.
- The average public university student borrows $30,030 to attain a bachelor’s degree.
*Growth slowed while several million federal loans were in 0% interest deferment though the nationwide total student loan debt has increased at an average monthly rate of $56 million in 2021.
COVID’s Impact on Student Debt
3.2 million new federal student loan borrowers borrowers and a spike in unemployment fueled the largest increase in the total student loan debt balance since 2013. Student debt relief efforts, however, may have helped drive down the average student loan debt.
- The nationwide total student loan debt balance increased 8.28% in 2020.
- The average student loan debt, meanwhile, increased 4.5%.
- In May of 2020, 9% of borrowers who attended public institutions were behind on their student loan payments.
- 7% of borrowers who attended private, nonprofit institutionts and 24% of borrowers who attended private, for-profit schools were behind on their loan payments.
- By July, 11.2% of adults with student loan debt reported they were unable to make at least one student loan payment that year-to-date.
- In early 2020, 75.3% of private student loans were in repayment while 20% were in deferment.
- While many private lenders offered suspension in payments of up to 3 months, few (if any) deferred interest.
Federal Loan Debt Under CARES
42.9 million borrowers owe $1.59 billion in federal student loans. Between the second and third financial quarter of 2020, the CARES Act offered student loan debt relief that affected a minimum of 20 million borrowers.
- An estimated 35 million Americans may qualify for student debt relief under the CARES Act of 2020.
- Between 2020’s 2nd and 3rd financial quarters, the amount of student loan debt in repayment decreased 82% while student debt in forbearance increased 375%.
- Between the 3rd and 4th financial quarters, student loans in forbearance declined 0.44%.
- Also during that period, the number of loans in repayment grew 33.3%.
- The number of loans in default also declined by 1.79%.
- 56.65% of all debt from federal student loans remains in forbearance until September 2021.
- 22.2 million or 48.8% of borrowers have loans in forbearance.
- 400,000 or 0.88% of federal student loan borrowers have loans currently in repayment, which is a 97.8% decrease from the 2nd financial quarter when 40.1% of borrowers had loans in repayment.
- 8% of the student loan debt balance belongs to students who are still in school.
- 2.81% of the total federal student loan debt is in a grace period.
- 7.8% of federal debt is in defaulted loans.
Some federal loans do not qualify for relief under the CARES Act. Borrowers with such loans may still be eligible for other payment arrangements, such as deferment or income-driven repayment plans.
Student Loan Debt Statistics
Student loan debt is now the second-highest consumer debt category. Nationwide, 43% of college attendees report they incurred some type of educational debt. Among today’s college students, 65% graduate with student debt.
- Last year, private student loan debt increased by $16.8 billion or 14%.
- 15% of all American adults report they have outstanding undergraduate student debt; 7% report outstanding postgraduate student loans.
- Between 39% and 50% of indebted student borrowers have loans from both undergraduate and postgraduate education.
- Among adults with student loan debt, 93% report borrowing to pay for their own education while 81% report borrowing to pay for a child’s or grandchild’s education.
- First-generation college students are twice as likely to report they are behind in making student loan payments.
- Graduates of private, for-profit institutions are more than twice as likely to report late student loan payments.
- Public university attendees borrow an average of $30,030 to attain a bachelor’s degree.
- Private, non-profit university attendees borrow $33,900 and private, for-profit students borrow $43,900.
- The student loan debt growth rate outpaces the rise in tuition costs by 353.8%.
- 23.6% is the annual growth rate of the total student loan debt balance, or 513% faster than the growth rate of the nation’s gross domestic product (3.85%).
- 94.8% of people with student loan debt borrowed for an undergraduate education.
- 44.2% of people with student loan debt borrowed for a postgraduate education.
Federal Student Loan Debt
While 30% of undergraduates borrow money from the federal government, the total amount they borrow accounts for 92.6% of student loan debt.
- 42.9 million Americans owe a total of $1.57 trillion.
- They each owe an average of $36,510 in federal loans.
- 52.8% of federal student loan debt is in Stafford Loans.
- 18.6% of federal debt is in subsidized Stafford loans; 34.2% is in unsubsidized Stafford loans
- 35.5% of federal student loan debt is in direct consolidated loans.
- 6.4% of student loan debt is from Parent PLUS loans, borrowed by parents on behalf of their children.
- 5% of student loan debt is from Grad PLUS loans going to graduate or professional students.
- 0.4% of student loan debt is from Perkins loans.
- The federal government loans an annual total of $45.3 billion to 44.4% of all postsecondary students (including graduate and professional students).
- The ED budgets $77 billion for federal direct student loans and $13.3 billion for FFEL loans.
- The ED budgets $90.2 billion for all loan programs, leaving $44.9 billion leftover after distribution to students.
Private Student Loan Debt
Private loan borrowing constitutes 8.4% of the outstanding student loan debt.
- The national private student loan balance is $137 billion.
- 88.5% of that balance is for undergraduate loans while 11.5% is for graduate student loans.
- 13% of students use student loans from a private source, such as a bank or credit union.
Other Educational Debt
Student loans are designed to only cover certain educational costs. Many students borrow money from other sources to pay for living expenses incurred during their time in college or other school-related expenses their student loans don’t cover.
- 95% of borrowers with outstanding debt related to their own education owe a balance on a student loan.
- 23% of borrowers with outstanding educational debt have a credit card balance.
- 4% of indebted borrowers used a home equity loan; 11% used some other type of loan.
- 11% of indebted borrowers who borrowed to fund a child or grandchild’s education used home equity loans.
Student Debt Demographics
- 49.2% of student aid recipients are financially independent.
- 14% of student financial aid recipients live in school-owned housing while 24.4% live with their parents.
- 15% of student financial aid recipients are married.
- 3.3 million, or 15.1% of student borrowers under 40 years old are behind on their student loan payments.
- 338,608, or 17% of student borrowers under 25 years old are behind on their student loan payments.
Student Loan Debt by Sex or Gender
- 56.5% of student financial aid recipients are female.
- 58% of all student loan debt belongs to women.
- Parents of male students are more likely to take out loans on their behalf.
- 16% of women have undergraduate student loan debt.
- 8% of women have postgraduate student debt.
For more detailed research, read our report on Student Loan Debt by Gender.
Student Loan Debt by Race or Ethnicity
- Black college students are the most likely to use federal loans, with 49.4% borrowing, while Asian students are the least likely to receive federal loans at 62%.
- 30% of black college graduates with student loans default in the first 12 years of repayment.
- White students are the most likely to receive private loans, with 7.1% borrowing privately; American Indian and Alaska Native students are least likely to borrow privately at 2.6%.
- Four years after graduation, 48% of Black students owe an average of 12.5% more than they borrowed.
- White and Caucasian borrowers owe 54% of the national student loan debt balance.
For more detailed research, read our report on Student Loan Debt by Race.
Student Loan Debt by Age
- Borrowers over the age of 60 increase student debt among their age group by 50% every 5 years.
- 35-year-olds have the highest average outstanding student loan debt at $42,600 per borrower, with an end balance 287% of the value of their original loan.
- 77.2% of aid recipients are under 30 years old; 37.8% of recipients are enrolled full-time.
- 17.7% of people with a student loan balance are under the age of 25.
- 68.6% of indebted student borrowers are between 25 and 50 years old.
- 34% of adults aged 18 to 29 years have student loan debt, making them more than twice as likely as adults in any other age group to have student debt.
- Among borrowers under 40 years of age, Black borrowers are the second-most likely to be current with their student loan payments, at a rate of 63%.
- The same demographic group is the most likely to be behind on student loan payments, at a rate of 26%.
For more detailed research, read our report on Student Loan Debt by Age.
Student Loan Debt by Educational Attainment
- Graduate students borrow 37% of federal student loan dollars.
- 60% of undergraduate certificate recipients owe an average of $16,940 each in federal loans.
- 42% of associate’s degree recipients owe an average of $21,890 each in federal loans.
- 63% of bachelor’s degree holders owe an average of $31,790 in federal loans.
- 54% of master’s degree holders owe an average of $70,070 in federal loans.
- 45% of doctoral degree recipients owe an average of $118,360.
- 71% of professional degree holders owe an average of $199,540.
Analysis: Slowing the Rise of Debt
Before the Great Recession of 2008, predatory private lenders targeted students with subprime loans, just as they did homebuyers. For-profit schools enrolling low-income students engaged disproportionately in these lending practices. In 2009, 27.15% of private loans were not school-certified. By 2019, 0.06% of private loans were not school-certified. Since then, these loans are more typically only available to prime borrowers with high credit scores.
It is all but certain that some of the increase in the cumulative student loan balance can be attributed to the debts originating from the subprime student loan era. The economic consequences of this type of predatory lending will likely be detectable in statistical trends for years to come.
Student Debt Experience
Even when there is equality in loan distribution, experiences with student loan debt vary with contributing factors.
- 52% of students who had taken on student loan debt did not feel it was worth it.
- Student loan payments have an annual growth rate of 6.6%.
- 53% of millennials have not bought a home because student loan debt either disqualified them or made it impossible to afford a mortgage.
- In 2018, 30% of college students lived at or below the poverty line.
- 14% are single parents and 56% of them devote over 30 hours/week caring for children.
- 88% of single parents in college have incomes at or below 200% of the poverty line.
Loan Forgiveness Eligibility
The process of student loan forgiveness appears to be muddled by ambiguous processes and errors. Borrowers are often unaware of actually being eligible for student loan forgiveness. Additionally, borrowers who should be eligible are denied because of negligence or misinformation by their loan servicer.
- The Higher Education Act, which expanded loan forgiveness in 2008, has never been funded by Congress.
- 0.7% of eligible borrowers will eventually benefit from student loan forgiveness.
- 6.7% of eligible student borrowers apply for loan forgiveness.
- $95.45 per indebted student borrower is the rate at which the federal government forgives student loans.
- The percentage of applications that are rejected each year is steadily rising.
- A little over 1% of applications for Public Service Loan Forgiveness have been approved since the program’s inception.
- In the program’s first year, 0.032% of applications were approved.
- 3 million student loan borrowers are eligible to apply for PSLF;
Just over 200,000 have applied.
- Over 25% of the labor force in the US is in public service with over a million student loan borrowers either eligible or approaching eligibility for student loan forgiveness
- $26.9 million of the $700 million allocated for Public Service Loan Forgiveness Program was approved by the Department of Education.
- Other reasons for student loan forgiveness include institutional dishonesty and fraud.
For more detailed research, view our report on Student Loan Forgiveness Statistics.
Analysis: Institutional Dishonesty
The cohort default rate (CDR) according to the ED is “the percentage of a school’s borrowers who enter repayment on certain FFEL or Direct Loan Program loans during a particular federal fiscal year… and default or meet other specified conditions prior to the end of the second following fiscal year.”
Schools with high cohort default rates can be sanctioned, lose eligibility to participate in federal loan programs, or other consequences. Therefore, it is in an institution’s best interest to have low cohort default rates. Unfortunately, many colleges with high default rates try to lower the rates by abusing the forbearance option for loans. The forbearance option is meant for the benefit of the student, not the institution.
In 2017, Navient, one of the largest student loan servicing companies in the US, was found to have collected $4 billion in interest charges incurred by multiple forbearance periods being used by borrowers.
Analysis: Dishonesty in Loan Servicing
Seventy percent of complaints about the companies servicing student loans are related to mismanagement and deliberate deception. Many students are unaware that they are eligible for income-driven repayment plans on federal loans as required by law and servicers frequently fail to assist them. Instead, borrowers are frequently placed in suspended payment options that rack up interest instead of income-driven repayment plans.
Additionally, borrowers frequently enroll in plans their servicers tell them are eligible for Public Service Loan Forgiveness. They make payments for many years only to be denied when they apply because they were not enrolled in a qualifying repayment plan. Service providers also fail to explain that loan consolidation restarts the progress a borrower makes towards loan forgiveness.
- In 2015, less than 6% of eligible borrowers of FFELP loans were enrolled in income-driven repayment plans compared to nearly 30% of borrowers with loans made directly by the Department of Education.
- More than 20% of FFELP borrowers were delinquent or in forbearance.
- Federal student loan servicer Navient received 43% of federal servicer complaints.
- American Education Services and Pennsylvania Higher Education Assistance Agency received 24% of complaints.
- 10% of complaints were about Nelnet, 4% about Great Lakes, and 2% were regarding servicer Heartland Payment.
- 13,900 complaints were in regard to federal student loans, with the biggest percentage of complaints related to dealing with the lender or servicer.
- 6,700 complaints in regard to private loans, with the biggest percentage of complaints related to dealing with the lender or servicer.
- California (236) and New York (222) were the states with the most private student loan complaints.
- Common complaints included:
- Frequently misapplied monthly loan payments
- Lost documents
- Unreasonable processing delays
- Inappropriate denials of income-driven repayment plan applications
Report: Navient vs. ED
In 2017, the Consumer Financial Protection Bureau (CFPB) sued Navient (formerly known as Sallie Mae), the largest student loan servicing company in the United States. Under a contract with the US Department of Education, this company services over $300 billion of federal and private student loans. CFPB alleged gross mismanagement, deceiving students and borrowers and depriving them of their legal rights.
- Failure to correctly apply or allocate payments made by borrowers.
- Pushed borrowers to pay more on loans than they could or pushing them into forbearance.
- Obscured information about maintaining lower payments.
- Deceived borrowers about requirements to release co-signer on their loans.
- Reporting loans that had been forgiven as in default, thereby effectively destroying the credit rating of students (including severely injured veterans) whose loans were forgiven or discharged under the Total and Permanent Disability discharge program.
- In 2019, the Consumer Financial Protection Bureau (CFPB) received over 20,000 complaints related to both federal and private loans, resulting in ongoing enforcement actions.
- Beginning in October 2017, the Federal Trade Commission (FTC), CFPB, US Dept. of Education, and state Attorney General offices announced “Operation Game of Loans” to pursue 36 enforcement actions against student debt relief companies in 11 states and District of Columbia:
- $95 million in illegal upfront fees scammed from student debtors.
- In 2018, the FTC secured judgments in 8 actions worth over $88 million, and in 2019, secured judgments worth over $43 million.
- CFPB enforcement actions alone have obtained judgments exceeding $17 million.
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