Student Loan Debt Statistics

In 2020, the amount of outstanding student loan debt in the United States has reached $1.6 trillion, owed by a collective 44.7 million borrowers:

  • Student loan debt has become the second-highest consumer debt category, second to mortgage debt. It has surpassed even the amount of credit card and auto loan debt in the United States.
  • The average amount of student loan debt is $32,731, with an average loan payment amount each month of $383
  • Only 25% of the total increase in student loans since 1989 can be attributed to the increase in students enrolling in college
  • Students graduating in 2018 left with an average student loan debt around $29,200, marking an increase of 2% from the class of 2017
  • 7.7% of student loan debt is owned by private lenders compared to outstanding federal student loans that make up the remaining 92%
  • $685 billion of student loans are in repayment status
  • $131.5 billion of student loans carried by students still in school
  • $128.4 billion are in deferment
  • $45.2 billion of loans are in a grace period
  • The rate of student loan delinquency (90+days delinquent) was 10.8%:
    • $122.9 billion of loans are in forbearance, owed by 2.8 million borrowers
    • $119.8 billion of loans are in default, owed by 5.5 million borrowers
  • 65% of students from the class of 2018 (both public and private institutions) graduated with student loan debt
  • In 2019, over half of US adults (52%) felt that taking on student loans was not worth it
  • Nearly 20% of students were behind on their student loan payments in 2018, with those who did not complete their degree most likely to fall behind or eventually default (270 days behind)
  • By 2023, 40% of borrowers that enrolled in college in 2004 are projected to default on student loans

Student Loan Debt: Distribution of Student Debt

By Balance

  • In 2019, over 42 million students owed less than $100,000 in student loan debt.
  • In 2019, 30% of borrowers owed between $20,000 and $40,000
  • Only 6% of students owed more than $100,000

Over Time

In less than 15 years, outstanding student loan debt has skyrocketed from $481 billion in 2006 to $1.6 trillion in 2020.

  • In 2018, the average student loan balance had reached a record high of $35, 359
  • 8% of students indicated in 2019 that it would take less than a year to pay off student loans in full, compared to 72% who felt it would take between 2-10 years
    • 46% felt it would take between 1-5 years
    • 26% felt it would take between 6-10 years

By State

With larger populations, the big population centers in the United States such as California, Florida, Texas, and New York top the list as the states with the highest amount of total student loan debt. Together, the resident borrowers in these states owe more than $420 billion in student loans.

However, when it comes to the highest average amount of debt owed per student, Connecticut tips the scapes with $38,669 for the class of 2018 and Utah comes in with the lowest average of $19,728.

By Institutional Category

For-Profit Schools

  • Students enrolled in for-profit schools are more likely to borrow more and nearly half (47%) default
    • Students of color are disproportionately more likely to borrow and default at for-profit institutions- 67% of black students who attended a for-profit school default within 12 years of enrollment
  • 23% of students who enrolled in a for-profit school in 1996 defaulted within 12 years compared to 43% of students who enrolled in 2004
  • 88% of graduates from for-profit colleges leave with student loan debt averaging $39,950- 26% higher in 2019 than in 2008
  • For-profit students borrow twice as much as public 2-year students and default at a rate of 47%
  • In comparison, among students who did not attend a for-profit school, the percentage of students likely to default went from 8% to 11% in the same time period

Non-Profit Schools:

  • 66% of graduates from public colleges leave with student loan debt averaging $25,550- nearly 25% higher in 2019 than in 2008
  • 75% of graduates from private non-profit colleges leave with student loan debt averaging $32,300- 15% higher than in 2008

Student Loan Debt: Federal vs. Private Student Loan Programs

In 2020, 92% of student debt is in the form of federal loans to students who owe $1.51 trillion towards Federal student loans:

  • Direct Subsidized Loans and Direct Unsubsidized Loans (Undergraduates)
    • 30 million borrowers owing approximately $280.7 billion for Stafford Subsidized loans
    • 39 million borrowers owing approximately $516 billion for Stafford Unsubsidized loans
    • 33 million borrowers owing approximately $797 billion for Stafford Combined loans
  • Direct PLUS Loans ( Parents and Graduate or Professional Students)
    • 1.4 million borrowers owing approximately $75.2 billion for Grad PLUS loans
    • 3.6 million borrowers owing approximately $96 billion for Parent PLUS loans
  • 2 million borrowers owe $6.2 billion on Perkins loans, and finally:
  • 11.7 million borrowers owe $536.1 billion towards Direct Consolidation loans
  • While no new Federal Family Education Loans (FFELP) loans were made by private lenders since 2010, nearly 30% of federal student loan debt is comprised of borrowers with these types of loans

Student Loan Debt: Private Student Loan Programs

Private loan borrowing constitutes about 7.7% of the outstanding student loan debt in 2020 or about $128 billion.

  • Undergraduate student private student loan debt made up 88.2% in 2019 compared to 11.85% of graduate private student loan debt
    • 75.3% of private student loans are in repayment status
    • 20% of private student loans are in deferment
    • 2.1% of private student loans are in forbearance
    • 2.4% of private student loans are in a grace period
  • Federal loans consolidated under a private loan do not have the same protections and rights granted to borrowers with Department of Education originating debts

Before the Great Recession, 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. Since then, these loans are more typically only available to prime borrowers with high credit scores.

  • In 2009, 72.8% of private loans were school-certified compared to 27.15% non-school-certified
  • In 2019, 99.94% of private loans were school-certified compared to 0.06% non-school-certified
  • Private loan delinquency has declined considerably since 2008, with 2019 seeing an approximate 4% delinquency rate
  • In 2009, the charge-off rate for private loans exceeded 10% and was below 2% in 2019

Student Loan Debt: Demographics

In 2016 (most recent data on IPEDS), 19.3 million students received financial aid in some form. During this year:

  • 8.4 million male students received financial aid, compared to 10.9 million female students
  • 11.3 million students between the ages of 15-23 received financial aid
  • 3.5 million students between ages of 24-29 received financial aid
  • 4.4 million students over the age of 30 received financial aid
  • 7.2 million students who received financial aid were enrolled full-time
  • 12 million students who received financial aid were enrolled part-time

Students who were considered independent were just as likely to receive financial aid as dependent students. However, other circumstances changed how many students might receive financial aid.

  • 9.7 million dependent students received financial aid, compared to 9.5 million independent students
  • 16 million students who were unmarried received financial aid, compared to 2.9 million who were married
  • 9.9 million students living off-campus and not with their parents received financial aid
  • 2.7 million students living in school-owned housing received financial aid
  • 4.7 million students living with their parents received financial aid

By Age:

  • In 2019, over half (23.2 million) of all student borrowers are under the age of 34. The group owing the most student loan debt is between the ages of 35 and 49. In addition:
    • 8.2 million borrowers are under the age of 24, owing $121.2 billion
    • 15 million borrowers are between the ages of 25 and 34, owing $501. 5 billion
    • 14.1 million borrowers are between the ages of 35 and 49, owing $575.5 billion
    • 6 million borrowers are between the ages of 50 and 61, owing $241.2 billion
    • 2.1 million borrowers are over the age of 62, owing $75.9 billion
  • 23% of first-generation students defaulted on their loans within 12 years compared to 14% of students who were not the first in their families to enroll

Student loan debt is not just a millennial problem. Adults over the age of 60 are increasingly taking on student debt. For example, they co-sign on loans for a family member or friend to attend college, borrow to help their children or grandchildren pay their loans, or repay loans taken out for their own education. Because many adults in this age bracket are living on a diminished or fixed income, student loan debt impacts their financial security.

  • Between 2012 and 2017, only five states in the US did not see the proportion of older borrowers who fell delinquent on their loans increase
  • Over half of the US saw an increase in older borrowers by 46%
  • Older borrowers in 75% of states in the US saw their median loan balance increase by over $1,000. Total outstanding student debt in this age group saw a 50% or more increase

By Race & Ethnicity:

The breakdown of students receiving financial aid in 2016 by race was as follows:

  • 71.2% of white students
    • 5.6% received work-study assistance
    • 37.8% received federal loans
    • 7.1% received nonfederal (private) loans
  • 80% of black students
    • 5.2% received work-study assistance
    • 49.4% received federal loans
    • 4.2% received nonfederal (private) loans
  • 71.4% of Hispanic students
    • 4.4% received work-study assistance
    • 28.9% received federal loans
    • 4.3% received nonfederal (private) loans
  • 62% of Asian students
    • 5.4% received work-study assistance
    • 20.9% received federal loans
    • 4.7% received nonfederal (private) loans
  • 69% of Pacific Islander students
    • 2.8% received work-study assistance
    • 30.9% received federal loans
    • 3.1% received nonfederal (private) loans
  • 76.7% of American Indian/Alaska Native students
    • 3.3% received work-study assistance
    • 29.5% received federal loans
    • 2.6% received nonfederal (private) loans
  • 76.8% of students of 2 or more races
    • 4.7% received work-study assistance
    • 39.9% of students received federal loans
    • 6.1% received nonfederal (private) loans
  • Students of color are considered one of the most vulnerable student populations.
    • Students of color are more likely to be first-generation college students
    • Unfortunately, students of color are also more likely to graduate with higher amounts of student loan debt
  • Black students are more likely to default on their loans in 12 years than students of other races/ethnicities. 30% of black students who graduated and 44% of black students who did not complete defaulted on student loans.
    • To compare, the 12 year default rate for other races was: 20% of Hispanic students who graduated, 22% of Hispanic students that did not graduate, 17% of white students who did not graduate, and 7% of white students that did graduate
    • 41% of graduates who attended for-profit colleges are more likely to default than students who attended nonprofit or public colleges
    • Over a third of black undergraduate students enroll in for-profit colleges

Student Loan Debt: Borrower Experiences

In 2019, 52% of students who had taken on student loan debt did not feel it was worth it. Below is a table showing how Americans felt by the amount of money borrowed.

Student Loan Debt: Economic Impact

  • In 2018, the US Department of Education collected over $85 billion, including fees, principal, and interest on federal student loans
  • Student loans must be repaid with after-tax income
  • Between 2005 and 2016, student loan payments increased- the average payment of $227 in 2005 surged to an average of $393 by 2016

Those carrying student loan debt are less likely to participate in the economy or pass life milestones. One of the largest impacts on the US economy is how student loan debt has impacted homeownership:

  • Among millenial renters, only 25% can afford a 10% down payment on a new median-priced home in the next 5 years.
  • Without student loan obligations, the number of potential buyers eligible to purchase would increase to between 38% and 50%.
  • For every 1% increase in student loan debt, the probability of homeownership will decrease by 15%
  • 53% of millennials have not bought a home because student loan debt either disqualified them or made it impossible to afford a mortgage
  • Between 2006 and 2016, the number of renters in the US has increased by over 23 million, compared to an increase in homeowners of just 700,000
  • 73% of Americans experience anxiety about paying rent and 62% feel they lose money by renting
  • Nearly 86% of adults feel homeownership brings greater stability and security

Student Loan Debt: Analysis of Contributing Factors

The student loan crisis is like a multiple-headed hydra. While it is difficult to say for sure what is the biggest cause, here are a few statistics that economists suggest are contributing to the problem:

  • In 2019, the Department of Education indicated additional actions were needed to “mitigate the risk of servicer noncompliance with requirements for servicing Federally held student loans” after an audit of the Financial Student Aid (FSA) department indicated rampant noncompliance that directly harmed students and their families
  • Tuition rates have skyrocketed, growing by nearly 260% since 1980
  • Subprime lending practices occurred in both the mortgage and student loan industry preceding the Great Recession
  • 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
  • 38% of students do not receive financial support from family

Missed Opportunities

Due to not completing a Free Application for Federal Student Aid (FAFSA), the class of 2018 left nearly $3 billion in Pell Grant “free money” on the table.

  • 37% of high school graduates in 2018 did not complete the FAFSA
  • 52% of high school graduates from the class of 2018 who applied to college were eligible for a Pell Grant, resulting in an average of $3,900 left behind that could have been applied to their education expenses
  • The states whose students left behind the most Pell Grant money in 2018 were:
    • Texas, with 44% of graduates failing to complete the FAFSA, missing out on $360 million in grants
    • California, with 33% of graduates failing to complete the FAFSA, missing out on $354 million in grants
    • Florida, with 39% of graduates failing to complete the FAFSA, missing out on $171 million in grants
  • In 2019, $27.5 billion was awarded to 7 million students enrolled in college

Loan Forgiveness Eligibility

The Public Service Loan Forgiveness (PSLF) program forgives student loan balances on federal loans for borrowers who work in certain public service jobs and have made 10 years of payments. The Temporary Expanded Public Service Loan Forgiveness (TEPSLF) was added for borrowers who are not eligible for PSLF because they were repaying their loans under a payment plan that made them ineligible for PSLF. However, the process is fraught with ambiguous processes and errors. Consequently, 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. Please see the next section for more information.

  • 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
  • In 2019, 54,184 Temporary Expanded Public Service Loan Forgiveness (TEPSLF) requests were made:
    • 99% or 53, 523 denied compared to 1% (661) approved.

Only $26.9 million of the $700 million allocated for Public Service Loan Forgiveness Program was approved by the Department of Educationbecause of a flawed process beginning with student loan servicers and misinformation.

Institutional Dishonesty & Abuse

The cohort default rate (CDR) according the US Department of Education 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.

Dishonesty in Loan Servicing

One of the contributors to the student loan debt crisis involves the problems student borrowers encounter with loan servicers. Servicers are responsible for managing student loan accounts. Complaints about the companies servicing student loans are overwhelmingly (nearly 70%) related to mismanagement and deliberate deception. For example:

  • Borrowers frequently placed in suspended payment options that rack up interest instead of income-driven repayment plans
  • Many students are unaware that they are eligible for income-driven repayment plan on federal loans as required by law and servicers frequently fail to assist them. To illustrate:
    • 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
  • Monthly loan payments frequently misapplied and documents lost
  • Unreasonable processing delays and inappropriate denials of income-driven repayment plan applications
  • As detailed above, borrowers frequently enroll in plans their servicers tell them are eligible for Public Service Loan Forgiveness and make payments for many years only to be denied when they apply because they were not enrolled in a qualifying repayment plan
  • Service providers failing to explain that loan consolidation restarts the progress a borrower makes towards loan forgiveness

Private Loan Servicer Complaints

6,700 complaints were 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.

The organizations issuing private student loans with the most number of complaints in 2018 were:

Federal Loan Servicer Complaints

13,900 complaints were in regard to federal student loans, with the biggest percentage of complaints related to dealing with the lender or servicer. The organizations receiving the highest number of complaints in 2018 were:

Student Loan Debt: Taking Action

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

Student Loan Debt: COVID-19 Update

Nearly 9 million borrowers in the United States who carry student loans may have at least one student loan that does not qualify for relief under the CARES Act. Direct and FFEL Loans owned by the U.S. Department of Education qualify.

  • Commercially-backed federal loans (many issued before 2010)
  • Private loans issued by banks
  • PLUS loans that paid for non-tuition expenses associated with college
  • Consolidated FFEL loans
  • Perkins loans

Students can check on studentaid.gov or with their service provider for more information on their particular loans. Borrowers not covered by the CARES Act may be eligible for payment arrangements, such as income-driven repayment plans or deferment of interest/late fees.

Sources:

  1. The Best Business Schools List
  2. Student Debt Forgiveness 2019
  3. Snapshot of older consumers and student loan debt
  4. CFPB Private Education Loan Ombudsman Issues 2019 Annual Report
  5. The MeasureOne Private Student Loan Report
  6. United States Census Bureau Education Tables
  7. The Integrated Postsecondary Education Data System
  8. Share of adults who believe their student loan debt was not worth it US 2019
  9. Morning Consult National Tracking Poll #190963
  10. 2020 Best Colleges | College Rankings and Data | US News Education
  11. Annual report of the CFPB Student Loan Ombudsman
  12. CFPB Sues Nation’s Largest Student Loan Company Navient for Failing Borrowers at Every Stage of Repayment
  13.  The Fed – Consumer Credit – G.19
  14. Length of time needed to pay off student loans in full US 2019
  15. Public Service Loan Forgiveness: Improving the Temporary Expanded Process Could Help Reduce Borrower Confusion
  16. Data point: Final student loan payments and broader household borrowing
  17. The Fed – Student Loans
  18. Reissuance of Final Audit Report, “Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance”