What is the Average College Debt in the US?

August 15, 2023
By AdmissionSight
Female student writing on a table with a laptop.

What is the average college debt in the US?

Student loans are a great way to finance not only tuition and fees but also room and board, as well as other educational expenses such as textbooks. Many individuals who are interested in attending college have entertained the idea, if not, already embraced such.

It’s possible that you’ve also given this some thought, particularly, if you’re giving serious consideration to applying to an Ivy League university. Following AdmissionSight’s recent blog on The Ivy League & Financial Aid, you may be curious about the average college debt by students in the United States.

What Is the Current State of College Debt in the U.S.?

The average college debt in the U.S. has become a significant concern for students, parents, and policymakers alike. As you stand on the precipice of your academic journey, it’s essential to be aware of the financial landscape you’re stepping into. The current state? It’s a mixed bag of hope, challenges, and decisions that could shape your financial future for years to come.

Historical perspective: How has college debt evolved over the years?

Let’s take a stroll down memory lane. Once upon a time, college was seen as a luxury, reserved for the elite few. But as the decades rolled on, higher education became more accessible, and with it came the rise of student loans.

The average college debt began its steady climb in the late 20th century, with tuition fees skyrocketing and financial aid struggling to keep pace. Fast forward to today, and the narrative has shifted.

College debt isn’t just about numbers; it’s about dreams deferred, opportunities missed, and the weight of financial burdens carried by young shoulders. It’s a story of evolution, from a time when graduating debt-free was the norm to an era where debt is an almost inevitable companion to a diploma.

The disparity in debt: Differences across states

But here’s where it gets even more intriguing. Not all debts are created equal. Depending on where you choose to study, the average college debt can vary dramatically. Students in some states, blessed with generous financial aid programs, might find themselves in a more comfortable position than their counterparts in states where aid is scant.

Then there’s the age-old debate: public vs. private institutions. While private colleges often boast smaller class sizes and prestigious names, they also come with a heftier price tag.

On the other hand, community colleges offer affordability but might not provide the full “college experience” that many yearn for. It’s a dance of decisions, each with its own set of financial implications.

What is the typical amount of debt incurred by US college students?

The vast majority of students who attend and graduate from four-year public universities do so with a level of student debt that is reasonable and tractable upon completion of their undergraduate studies.

Approximately 42 percent of students who attended public four-year universities graduated with a bachelor’s degree without incurring any debt, and 78 percent of students graduated with debt that was less than $30,000.

a female student being interviewed and hand shaken

Only four percent of graduates from public universities were able to leave with more than sixty thousand dollars. And those with debts of over $100,000 are much more unusual.

What is the average 4-year bachelor’s degree debt by the state?

What is the typical amount of debt incurred by students who earn a bachelor’s degree after four years? The majority of the states that have the highest levels of debt can be found in the northeastern part of the United States. Most of the states with low levels of debt can be found in the Western region.

The typical amount of consumer debt was greater than $30,000 in 19 states, with the average in five of those states being greater than $35,000.

  • The average amount of debt carried by graduates with a Bachelor’s degree from a four-year college or university in New Hampshire is $39,930.
  • In 18 different states, the total amount of student debt has increased at a rate that is twice as fast as the rate of inflation during the past 17 years.
  • Utah has the lowest percentage of student borrowers, at 39%, making it the state with the lowest overall student debt.
  • South Dakota is the state with the highest percentage of students who have accumulated student loan debt, at 73%.
  • The average amount of debt that graduates with a Bachelor’s degree in Utah is the lowest in the US at $18,344.

What is the average college debt upon graduation from a four-year degree?

What is the average college debt that one has upon graduating with a four-year degree? Among those who borrow, the average debt at graduation is $25,921 — or $6,480 for each year of a four-year degree at a public university. Among all public university graduates, including those who didn’t borrow, the average debt at graduation is $16,300.

As the US Bureau of Labor Statistics puts it into perspective, consider that median annual earnings for bachelor’s degree holders are $36,000 or 84 percent higher than those whose highest degree is a high school diploma. Bachelor’s degree holders make $1.2 million in additional earnings over their lifetime.”

Two people talking in a table.

In recent years, a number of people have asserted that graduates’ accumulated college debt precludes them from purchasing a property. However, after looking at the statistics, the White House Council of Economic Advisors came to the conclusion that individuals are more likely to own a property if they had attended college rather than less likely.

According to the findings of a report conducted by the White House, “By age 26, households with student debt are more likely to buy a house than those that did not attend college.” “By the time they are 34 years old, college graduates with or without student debt have a similar likelihood of purchasing a home, and both are significantly more likely to do so than those who did not complete college.”

What is the average number of student loans per borrower?

What is the typical number of student loans taken out by each individual borrower? More than ninety-five percent of students who start out as undergraduates and borrow money from the federal government in order to pay for their Bachelor’s degrees continue to do so for the whole four years.

According to the findings of the NPSAS for the 2015-2016 academic year, an average of 85 percent of undergraduate students who borrowed a subsidized Federal Direct Stafford loan also borrowed an unsubsidized Federal Direct Stafford loan.

These findings are based on the average college debt of the previous academic year. Similarly, 85 percent of undergraduate students who took out an unsubsidized Federal Direct Stafford loan also took out a subsidized Federal Direct Stafford loan to help pay for their education.

Therefore, the typical student who borrows for their Bachelor’s degree will graduate with 7.5 or more Federal Direct Stafford loans, including both subsidized and unsubsidized loans. This is the case regardless of whether or not the student received any financial aid.

A jar of coins placed on a table.

About 11% of students also take out loans from institutions or private lenders, while another 6% take out loans from institutions or private lenders in addition to their federal student aid. Because of this, the typical number of student loans has increased to 8.2 loans.

As a result, the average amount of student loans a graduate with a Bachelor’s degree will have will fall somewhere in the region of 8 to 12. This does not take into account loans from the Federal Parent PLUS program.

What is the monthly average student loan payment?

How long does it take to get out of the average college debt? According to the Report on the Economic Well-Being of U.S. Businesses and Workers from the Federal Reserve Board, U.S. In 2016, the average monthly payment for student loans made by households was $393, and the median payment was $222. These figures are from 2017 and 2018. The results of the Survey of Household Economics and Decision-making are the source of these numbers (SHED).

According to the findings of another study conducted by SHED, “individuals who either did not complete their degree or who attended a for-profit university are disproportionately likely to fall behind on their student loan payments.”

When the number of borrowers is factored in, the average length of time it takes to repay a student loan is 15.5 years, assuming that the maximum repayment period for each repayment plan is used. This is based on the assumption that any extended and graded payback programs will not exceed 25 years.

a business woman looking at the camera while her colleagues are at her back

The 25-year payback term is equivalent to the typical amount of debt that is repaid through each of the repayment plans.

If one instead considers a maximum of 30 years, which would involve merging the loans, the average repayment time becomes 15.9 years when the number of borrowers is taken into consideration.

As the typical amount of debt has grown over the years, so has the typical length of time it takes to repay it. When we last checked, the typical duration of a loan payback was 14.4 years.

It is important to keep in mind that the maximum time included in the existing repayment plan for debtors who are already in repayment serves as the basis for these figures.

Borrowers have the propensity to select the repayment plan that features the lowest monthly payment; this plan typically also correlates to the longest repayment term. This is because selecting this plan “saves” the borrower money in their monthly budget.

It is possible that certain borrowers will be required to make payments for a longer period of time if the borrowers opt to change their repayment plans or take advantage of deferments and forbearances.

Do delinquencies exist in college debts?

In the fourth quarter of 2021, approximately five percent of outstanding student loans were overdue by at least ninety days or were in default. However, this figure is far lower than it should be because the Department of Education counts as current federal loans that are now in forbearance as a result of COVID-19.

Once the previously halted payments are resumed, a portion of the loans will be considered to be in default status.

When it comes to private student loans, the rates of delinquency and default have been consistently falling over the past decade, despite the fact that more people have taken out these types of loans as mitigating actions towards average college debt.

What is Student Loan Forgiveness Program?

What exactly is meant by the phrase “Student Loan Forgiveness Program”? It is a program that examines the student debtor if s/he is eligible to have the balance of federal student loans forgiven, canceled, or discharged in certain circumstances.

As of September 2021, the Student Loan Forgiveness (SLF) program had effectively discharged the debts of 10,776 students who had borrowed money from the federal government (SLF). Over one billion dollars worth of debt has been discharged, with the typical applicant paying off approximately $95,000 worth of debt.

In the future, there may be an additional 1.3 million debtors who are qualified for PSLF, which would represent approximately $132 billion in debt.

Between November 9, 2020, and September 30, 2021:

  • There were a total of 678,373 SLF forms that were submitted.
  • The vast majority of Employment Certification forms were granted; 99.7% were deemed to meet the standards of the business.
  • Almost all of the SLF applications (98%) were turned down since some of the applicants did not fulfill the standards. The applicant has not completed 120 qualifying payments on their Direct loans, which was by far the most prevalent cause for the refusal of the application.

Facing some hard facts

Some people are worried about the fact that the average college debt in the United States, including debts incurred by graduating students and those in graduate school, has already reached $1.6 trillion. It is a fact that the aggregate amount of student debt has grown over the course of the past two decades.

Despite this, a portion of the growth can be attributed to the growing number of students attending colleges around the country. And despite the fact that only 13 percent of Americans hold graduate degrees, households with graduate degrees are responsible for 57 percent of all consumer debt. 7 In order to pursue a profession in an area that pays much more, students in these schools take on significantly more debt than their peers.

Are There Alternatives to Traditional College That Can Reduce Debt?

In your quest to navigate the maze of higher education, you might find yourself wondering: “Is there another way?” The looming shadow of average college debt has prompted many to seek alternatives to the traditional college route. And yes, there are paths less traveled that can lead to success without the hefty price tag. Before you commit to a path that might saddle you with debt, it’s worth exploring these alternatives. They might not only save your wallet but also align more closely with your personal and professional aspirations.

The rise of online education and its cost implications

Enter the digital age, where the classroom can be your living room and your professors, pixels on a screen. Online education has surged in popularity, and it’s not hard to see why.

Online remote learning. Teacher with computer having video conference chat with student and class group.

With flexibility at its core, it allows you to learn at your own pace, often at a fraction of the cost of traditional institutions. But here’s the kicker: this model can significantly reduce the average college debt.

Without the overheads of on-campus amenities and the ability to scale courses to a global audience, many online platforms can offer quality education at a more affordable rate. But, as with all things, it’s essential to do your research. Ensure the institution is accredited, the courses align with your goals, and that you’re prepared for a self-driven learning experience.

Community colleges, trade schools, and apprenticeships as viable alternatives

But what if the digital realm isn’t your cup of tea? Fear not, for there are brick-and-mortar alternatives that won’t break the bank. Community colleges, often overlooked, offer foundational courses that can be transferred to four-year institutions.

This route can slice your average college debt in half, granting you the same degree at a discounted price. Then there are trade schools and apprenticeships, perfect for those who have a specific craft or skill in mind.

Whether you’re passionate about welding, plumbing, or graphic design, these avenues provide hands-on experience, often leading to well-paying jobs without the shadow of hefty student loans.

The value of gap years: Exploring the world, gaining experience, and saving money

Now, let’s talk about time. A gap year, once seen as a luxury or a sign of indecision, has gained traction as a strategic move to reduce average college debt. How, you ask? Well, a gap year can be a golden opportunity to work, save money, and even explore scholarship or financial aid options.

Beyond the financial aspect, it’s a chance to travel, volunteer, or intern, gaining invaluable life and work experiences. By the time you step into college, you’ll not only have a clearer vision of your goals but also a more robust financial footing.

Segue to AdmissionSight

In the same vein as providing helpful information, we at AdmissionSight are also able to provide insights regarding the admissions process for colleges. AdmissionSight takes pride in being a prominent college admissions consultant in the industry. We have more than a decade of experience supporting individuals just like you in achieving admission to the prestigious educational institutions of their choosing.

Get in touch with us right away to schedule a consultation that is completely free of charge.

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