June 11, 2017

Student Loan Debt Statistics

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The average graduate has $37,172 in student loan debt, making it America's fastest growing consumer debt. Read on for more alarming statistics.

Worried about student debt? So are we. The student loan debt crisis is real. Total student loan debt quickly surpassed auto loan and credit card debt. Only mortgage debt is higher.

  • Average graduate left college with $37,172 in student loan debt. The average monthly student loan payment is $351.

  • Americans owe $1.3 trillion in student loan debt.

  • 44 million borrowers still owe student loans.

  • The average student loan balance for a graduate with a Bachelor's is $35,000. For a Master's, the average is $59,000.

Uncover the most shocking statistics about student loan debt. Keep reading for jaw-dropping statistics to help you get real about one of America's largest debts.

3 Facts Every College Grad Needs to Know

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  • How much debt does the average college graduate have?
    Average student loan debt is staggering. The average college graduate leaves college with around $37,172 in student loans. Ten years ago, the average student left college with just $20,000 in student loans.

  • How many college students have student loans?
    Seven out of 10 college students leave college with student loans. This number has stayed consistent over the last 10 years. It's alarming that it has increased faster than any other consumer debt. Keep in mind that colleges in different states have varying tuition and you can save a lot of money on student loans just by attending a school a state or two away.

  • What is the average student loan monthly payment?
    The average student loan monthly payment remains at $351. In 2005, the average payment was $227 after adjusting for inflation. This takes into account payments both higher and lower than $351. Only a small number of graduates have monthly payments exceeding $351.

    Tip: If you have questions or concerns about your student loans you can visit Federal StudentAid while there you can also use the repayment estimator to get an idea of how much you will need to pay each month.

Student Loan Debt Crisis in America

  • What is student debt?
    Money you borrow to pay for higher education is student debt. Many students think a higher education means a higher-paying career. There are many types of student loans, including those for public and private schools.

    Tip: The federal government provides students with many repayment options for their loans. If the standard repayment option is not affordable you may want to select the graduated or extended options. There are also four income driven repayment options. Speak with your loan servicer to determine the right option for your current financial situation.

  • What was the average student loan debt in 2015?
    In 2015, graduates left college with an average of $30,100 in student debt. This is 4% higher than 2014.

  • What was the average student loan debt in 2014?
    In 2014, students graduated college with an average of $28,950 in student loans.

  • How much has student loan debt increased?
    Since 2004, the number of students with loans increased from 65% to 69%. What has changed drastically, however, is the average amount of debt. The amount has increased almost twice the rate of inflation.

Rising Tide

  • How much student debt is out there?
    According to the Federal Reserve, Americans have a total of $1.3 trillion in student debt.

  • What is the average interest rate on a student loan?
    Today, federal loans, either subsidized or unsubsidized, offer a 4.45% interest rate.

    There are several types of student loans, though. The average depends on the loan in question. Federal student loans have fixed interest rates set by the government. The rate you get doesn't depend on your qualifying factors. Private student loans, though, have both variable and fixed rates based on your credit, income, and debt ratio.

  • What is the average student loan debt for a master's degree?
    Almost 40% of the federally funded student loans fund graduate programs. This money funds degrees in a variety of fields, not just medical degrees.

  • How many years does it take to pay off a student loan?
    The standard repayment period for federal student loans is 10 years. This is the default plan for every borrower. If you can't afford the payment, discuss it with your loan servicer. There are several repayment plans available.

  • How long is the grace period on student loans?
    The repayment period doesn't begin until you graduate or leave college. If you stay enrolled at least half-time, repayment isn't required. Once you leave college, though, you have a 6-month grace period. This doesn't include PLUS or Perkins loans, though.

    Deferments and Forbearances: Remember if you are unable to keep up with your federal loan payments the government provides you with two options. A forbearance is useful in times of financial hardship and useful for up to 12 months at a time. A deferment is useful during a job loss or underemployment, they also apply a deferment when you return to school and can be applied for up to six months at a time.

  • How many college students have subsidized loans?
    The Department of Education pays accrued interest on subsidized student loans. This year 6.9 million borrowers held these loans. They borrowed $22.6 billion.

  • How many college graduates signed up for PSLF?
    The PSLF program forgives federal student loans for those working in public service. Only federal loans are eligible. The program requires at least 10 years in public service. This year marks the first year any borrower will be eligible. At this point, 400,000 borrowers signed up. This doesn't include those who will retroactively apply for the program.

  • What fees does the government charge for federal student loans?
    Subsidized and unsubsidized student loans incur loan fees. The loan servicer deducts the amount directly from your disbursements. The servicer deducts amounts proportionate to the disbursement. Federal loans disbursed before October 1, 2016 and after October 1, 2015 pay 1.068% of the loan amount. Those disbursed before October 1, 2017 and after October 1, 2016 pay 1.069% of the loan amount.

    Direct loans including Unsubsidized, Subsidized, for undergraduate and graduate students and Parent PLUS are the leading type of federal student loans. Following them is the Federal Family Education Loan Program (FFEL) although, this program stopped funding loans as of July of 2010. The final is Perkins loans with the smallest portion of federal student loan borrowers. Keep in mind not all schools take part in Perkins loans.

  • How much higher are interest rates for the 2017-2018 school year?
    Starting July 1, undergraduate federal loan interest rates rise 15.4% and graduate loan interest rates rise 11.5%. This represents a 4.45% rate for undergraduate loans and a 6% rate for graduate loans.

  • How much more will the standard repayment plan cost borrowers?
    A borrower with the average $34,000 in debt will pay $1,300 more in interest.

  • What is the unemployment rate for bachelor's degree recipients?
    As of January 2017, adults aged 25 and older with at least a bachelor's degree had a 2.5% unemployment rate. This rate remained steady from 2016. The overall unemployment rate for everyone was 48% higher at 4.8%.

  • How many borrowers default on student loans daily?
    As shocking as this sounds, every day 3,000 borrowers default on their student loans. This means 1.1 million more people default each year. It's no wonder there are 4.2 million graduates in default on their student loans. Default occurs at 270 days past due. Always keep in contact with your loan servicer if you're struggling to make payments.

    Consolidation: You may have multiple federal direct loans (unsubsidized or subsidized) from different federal servicers that have different due dates and interest rates. A great option to consider is consolidation of your federal student loans. You can reduce your loans to a single monthly payment, receive a lower median interest rate and extend your repayment period to up to 30 years.

  • What's the maximum amount of federal loans for an undergraduate?
    Dependent students can receive the following loan amounts from the government:

    • 1st year of college: $5,500 ($3,500 max in subsidized loans)
    • 2nd year of college: $6,500 ($4,500 max in subsidized loans)
    • 3rd and 4th year of college: $7,500 ($5,500 max in subsidized loans)

    Definition: Independent students are one of the following:
    • 24 years or older
    • Married
    • Veteran
    • Active military
    • Graduate student
    • Has legal dependents

  • Can the government garnish wages for unpaid federal student loans?
    Not paying your student loans for 360 days will result in collection activities. Among those activities, wage garnishment may occur. First, the government accelerates the loan. This means you owe the entire remaining balance. They may also send it to a collection agency. If this does not resolve the issue, they can garnish your wages or even seize your tax returns. They don't need a court ordered judgment. They can garnish up to 15% of your disposable income.

  • How many college graduates move back home?
    Almost half of 18-24-year-olds live at home with their parents. But only 19% of them have at least a bachelor's degree.

    Related: Outstanding loan debt has had a negative financial effect on Millennial loan borrowers. They will be dealing with loan repayment well into their 40s and as a result it has affected other aspects of life; such as starting a family, getting married and purchasing a first home.

  • What percentage of parents are concerned about paying for college?
    A 2017 survey by Discover Student Loans shows the concern parents have about college costs. 74% of parents in the survey are very or somewhat worried about paying for college (40% are very worried, 34% are somewhat worried).

    Surprisingly, though, only 45% of those surveyed completed the FAFSA. This is the Free Application for Student Aid. Without this application, families are ineligible for federal student aid or even grants.

Bottom Line

Student loans can help finance a college education.

But make sure you understand the depth of your loans. Ask your loan servicer about the terms. Make sure you exhaust all federal options and inquire about grants.

Once you graduate, consider an income-driven repayment plan. You may then be eligible for loan forgiveness too. The more you know, the more affordable your college education can be.

Sources and References:

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