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Average Student Loan Debt

The fastest-growing debt in America, federal student loans currently sit at a total of $1.58 trillion (as of summer 2021).1,2 Average student loan debt per borrower is $38,792, with average monthly payments coming in at $393.3,4 The majority of students (69%) graduate with this kind of debt, and around 45 million Americans have student loans.5,6

That’s a quick look into student loan debt in America today. Read on for even more research as we share insights and breakdowns related to:

Average Student Loan Debt Statistics
Total Federal Student Loan Debt
Total Private Student Loan Debt
Current Status of All Student Loan Debt
Average Student Loan Debt by Age
Average College Tuition vs. Debt Over Time
Joe Biden’s Proposal for Student Loan Forgiveness
Effects of Student Loan Debt
What to Do if You Have Student Loan Debt

Average Student Loan Debt Statistics

Let’s start off with a snapshot of those five student loan debt stats we mentioned in the intro.

student loan debt overview

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So, if 45 million Americans are carrying around this type of debt, what’s the repayment situation? On average, Americans take 20 years to pay off college loans, though they can take up to 46 years or more.7 Twelve percent of borrowers pay off their student loan debt after about four years, but this is not the norm.8 In fact, 12 years after starting college, the average borrower has paid off only 34% of this debt.9 And some Americans still owe on their student loans into their 70s!10

The average student loan interest rate is 5.8%, though this number varies based on loan type.11 (See the next two sections for more on this.)

Let’s put some of these numbers together in our Student Loan Payoff Calculator for two repayment examples:

  • If you pay that average monthly payment of $393 on a $38,792 loan with 5.8% interest, it’ll take you 11 years, and you’ll end up paying $14,052.09 in interest.
  • If you take 30 years to pay off a $38,792 loan with 5.8% interest (which would be a $227 monthly payment), you’ll end up handing over $43,526.30 in interest. That means you’re paying more in interest alone than the actual amount borrowed in the first place! Ouch.

One more interesting note: 44% of high school grads will go to a four-year college, but only two-thirds of those students will actually graduate.12,13 And of the 2.2 million 2018 high school graduates who started college, nearly 460,000 took on student loan debt but won’t graduate.14,15,16,17 Are non-graduates exempt from repayment? Nope. These borrowers still have to pay off their debt (plus interest)—with no degree to show for it.

Total Federal Student Loan Debt

Simply put, federal student loans are those funded by the U.S. Department of Education. More than 90% of student loans are federal.18 There are three federal loan programs: Direct Loans, Federal Family Education Loan (FFEL) Program Loans, and Perkins Loans. Here’s a breakdown of the amount owed and number of borrowers for each of these three: 19

federal student loan debt by loan programsInterest rates on these loan programs change over time and vary based on loan type and disbursement date (the date when funds are given to the borrower), except Perkins Loans, which have a fixed rate of 5%, no matter the disbursement date. Right now, undergraduate borrowers get a 3.73% interest rate on Direct Subsidized Loans and Direct Unsubsidized Loans, while graduate or professional borrowers get a 5.28% rate on Direct Unsubsidized Loans.20  

The FFEL was the first federal student loan program created in 1965. Though this program was eliminated in 2010, meaning no new loans in this category have been given out since then, borrowers still owe $239 billion on outstanding FFEL Program Loan debt.21

federal student loan debtTotal Private Student Loan Debt

Private student loans (sometimes referred to as nonfederal loans) come from a bank, credit union, state loan agency, or some other kind of financial institution. In general, private loans cost more—with interest rates as high as 14.18%.22 Nonfederal loans hit an all-time high of $22.6 billion before the Great Recession, when they dropped to $7.4 billion by 2010. But they’re on the rise again.23

Current Status of All Student Loan Debt

Of the nearly 45 million total borrowers, how many are actively paying on their federal student loan debt? The answer is 18.1 million. The rest can be broken into other statuses:24

  • 6.8 million borrowers are students who are still in school and not currently paying.
  • 7.9 million borrowers are in default (failure to repay), 3.7 million are in deferment (a pause when interest usually doesn’t grow), and 4.6 million are in forbearance (a pause or payment reduction that usually still grows interest).
  • Also, 1.2 million borrowers are in a grace period, which is brief time period after graduation before you have to start making payments on your federal loans.

current status of student loan debt

Average Student Loan Debt by Age

Student loan debt for Americans age 18–29 is at $333 billion. Americans ages 30–39 have the largest total at $512 billion.25,26,27 You’ll notice from the Student Loan Total Debt by Age chart below that even the 70+ crowd isn’t student loan debt-free. In fact, they collectively owe $27 billion.28,29,30 

Whether this total is from a degree earned later in life, lingering loans from their youth, or money they borrowed to put their children through school is not clear—but even senior citizens are affected by student loan debt.

student loan total debt by ageAverage College Tuition vs. Debt Over Time

Student loans began partly as a way to produce more scientists and engineers to beat Russia in the Space Race in 1957. Aiming to boost higher education attendance—specifically in science, math and foreign languages—the National Defense Education Act of 1958 seems to have affected the rise in college students from 3.6 million in 1960 to 7.5 million in 1970.31

Attendance isn’t the only thing that’s been on the rise. As we mentioned earlier, student loans are the fastest-growing debt in America. We’ve seen about 157% growth since the Great Recession in 2007 alone.32 Whether this is related to the ever-growing increase in tuition costs (up a striking 320% from 30 years ago), increase in inflation over time, or pressures from society to get a college degree, student loan debt is increasing steadily.33

First, note the increase in tuition rates over the past 40 years: 1,068% since 1978.

tuition increase

The next chart shows the increase in cost of living over the past 30 years—with higher education costs growing much faster than other areas. Since 1994, education costs have risen 436%.34,35

These numbers may seem overwhelming—but there is hope. Remember 1) there are high-paying careers that don’t require degrees, and 2) there are ways to get a debt-free degree despite the rise in cost. The number is disheartening, but it doesn’t have to be defeating.

cost of living increaseThe final chart is a quick glance at the rapid growth in student loan debt over the past 15 years.

 

student loan debt over time

Some would say the hike in tuition costs and cost of living influences student to take out even more student loan debt, which in turn creates a heavy financial burden for Americans as they exit college and hope to begin a profitable career.

Joe Biden’s Proposal for Student Loan Forgiveness

Much is being said about how much the White House can help your house by way of sweeping student loan forgiveness. For a while, there was the possibility of an executive order to cancel $50,000 in student loan debt for borrowers.

However, in a town hall broadcast on CNN in February 2021, President Joe Biden said this would not happen, despite the request of many Democrats in the House and Senate. The president has mentioned the possibility of forgiving a lower amount, $10,000.36  

As of summer 2021, Biden’s canceled nearly $3 billion of current student loans—but that’s just 0.19% of that $1.58 trillion we mentioned early.37 Not great. It’s still uncertain whether President Biden can (or will) forgive more student loans at this point.

Effects of Student Loan Debt

Young adults say the weight of student loans keeps them from moving forward in both basic financial and life decisions. For example, 47% put off buying a home and 21% even wait to get married because of their student loan debt.38 Also, 60% of those with a degree and student loans say their retirement savings aren’t on track.39

And don’t forget about that $27 billion owed by those 70+. In what should be their golden years of retirement, these Americans are still burdened by student loans.

According to our own quarterly research, 53% of those who took out student loans for college say they regret doing so. And 43% regret going to college altogether.

Many people consider a college education to be a worthy reason to take on debt. The degree is supposed to be an automatic advantage, a leap forward with your career and finances. And yet, within one year of graduation, 22% of borrowers had trouble making payments on their loans.40 Not to mention only 40% of college graduates land a salaried job within their first year after graduating, and 44% of graduates take a job outside their field of study.41

Whether they are unable to find a profitable career connected to their degree is unclear, but the percentage of graduates living with student loan debt without enjoying the benefits of their degree is worth noting. They throw their grad caps in the air, and what comes down is an immediate $38,792 disadvantage.

What to Do if You Have Student Loan Debt

Student loan debt is on the rise, and if you’re being held down by it—stuck under payments that keep you from walking through all the doors you dreamed a college education would open—know it doesn’t have to be this way. Here’s how you can rise up:

1. Make a decision.

It’s time to decide: Do you want to keep chipping away at this debt for the next 10, 20 or even 30 years? Or do you want to free up $393 every month—or whatever your monthly loan payment is? Do you want to pay more than double the loan amount in interest alone? Or do you want to ditch your student loan debt for good?

Listen, your income is your greatest wealth-building tool, and those student loan payments are stealing from your future. Every. Single. Month. It’s time to decide if you want the weight of these payments, or the freedom to move forward.

2. Find out if refinancing your student loans is right for you.

Okay, so you’re ready to get out from under these loans. Now check into refinancing. What’s that? It’s when you use one private lender to pay off all your other lenders. This company then becomes your new lender. Let’s make this clear: We aren’t into refinancing all types of debt, but there’s an exception with student loans—if and only if you use a trustworthy company (one that doesn’t try to get you into more debt and doesn’t charge to refinance) and you still work to pay off your loans even earlier than the refinancing term. (We’ll talk about that in a minute.)

So, how can refinancing help? By refinancing for a lower rate, you’ll pay less interest on your loan every month, so you can save more money. Then you’ll use those savings to pay off the debt even quicker. (You can get a rate check with our trusted partner. They offer totally free refinancing and no hidden agendas, thank you very much.)

3. Keep making payments.

The CARES Acts of 2020 offered temporary relief on student loan payments, which has recently been extended to September 30, 2021.42 If you’re in major financial distress, your main focus with your money right now is to cover what’s called your Four Walls: food, utilities, shelter and transportation.

But if you’re doing just fine financially, keep making payments on your student loans. Why? With 0% interest on federally owned student loans, your entire payment is going directly toward your principal (the amount you took out). Heck. Yes.

4. Pay off your student loans early.

Now it’s time to pay off all your student loan debt with the intensity of a gazelle running from the jaws of a hungry cheetah.

The thing is, the cheetah is the fastest land animal. But when the gazelle decides it doesn’t want die today, it runs faster. Your student loans might feel massive—maybe even unbeatable. But it’s just not true. Yes, paying off debt is tough. But you’re tougher. You’re faster. You’re more intense.

If you want more guidance on paying off debt, we’ve got two great resources for you. One is Anthony ONeal’s Quick Read, Destroy Your Student Loan Debt: The Step-by-Step Plan to Pay Off Your Student Loans Faster. The second is a free trial to Ramsey+, our all-access membership to the content that walks you through your debt-free journey and the tools you need to make it happen.

So, don’t give up, and don’t give in. Remember the extra $40,000 or so in interest that’s trying to hunt you down. Remember the future you’ve already worked so hard for—and then work even harder to make it a reality.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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