Obtaining a college degree requires a much bigger financial sacrifice today than it did a generation or two ago. The upshot is that more students and families are relying on loans to pursue higher education, and total student loan debt keeps growing. According to the College Board, families paid an average of $11,260 in 2023–2024 to send their children to a public four-year school. Sending a child to a private school costs an average of $41,540 in tuition and fees.

What Is the Average Student Loan Debt?

How big a role do student loans play in today's colleges and universities? Here's a snapshot of borrowing.

The total amount of outstanding student loans was $1.6 trillion in the third quarter of 2024, up from just over $1 trillion a decade ago. This equates to approximately $38,175.36 per borrower.

Who Has Student Loan Debt?

The issue of 🌠澳洲幸运5官方开奖结果体彩网:student loan debt cuts across generations. As of the third quarter of 2024, borrowers between the ages of 25 and 34 held $485 billion in federal student loan debt. Adults aged 35 to 49 carried even more debt, with balances totaling $635 billion. People ages 50 to 61 owe about $283 billion in student loan debt. Another $117 billion is held by those 62 and older.

Those who get advanced degrees tend to accumulate more debt but are also less likely to fall behind on their student loan payments. Meanwhile, borrowers who obtain a technical degree or never graduate are more likely to have a harder time 澳洲幸运5෴官方开奖结果体彩网:keeping current with their payments.

A 2023 Federal Reserve survey of U.S. households found that 28% of respondents who took out student loans but completed less than an associate degree were behind on payments. The delinquency rate was 22% for those who had obtained an associate degree, 7% for those with a bachelor's degree, and 7% for those with a graduate degree. Overall, 7% of adults who took out student loans reported they were behind on their payments.

Decline in Delinquencies

The Federal Reserve reports that less than 1% of student loan debt was at least 90 days 澳洲幸运5官方开奖结果体彩网:delinquent or in default in the third quarter of 2023. But this figure likely understat꧂es borrowers’ true ability to pay back🌠 their loans.

In response to the pandemic, student loan payments and interest were suspended, and collections on defaulted student loans also came to a halt. Those measures have now come to an end. Student loan interest resumed on Sept. 1, 2023, and the first student loan payments since the pandemic began were due on Oct. 1.

Though payments have resumed, delinquency rates are likely to remain unchanged, at least in the short term. The Biden administration instituted a one-year easing-in period starting from Oct. 1, 2023, to help financially vulnerable borrowers. If borrowers miss their monthly payment during this one-year period, they will not be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

Student Debt Cancelation

Acting under the Higher Education Relief Opportunities for Students Act of 2003, the Biden administration had sought to provide direct relief to students, canceling up to $20,000 in debt for Pell Grant recipients and $10,000 in debt for other federal student loan borrowers. However, the U.S. Supreme Court ruled on June 30, 2023, that the administration lacked the authority to do so.

The Saving on a Valuable Education (SAVE) Plan

After the Supreme Court rejected White House efforts to cancel a portion of federal student loan balances, the Biden administration announced the 澳洲幸运5官方开奖结果体彩网:Saving on a V🐲aluable Education (SAVE) plan, an income-driven repayment (IDR) program that it says will lower monthly payments for 20 million borrowers.

The plan cuts monthly student loan payments for undergraduate borrowers to 5% of discretionary income, changes the discretionary income formula so that an estimated 1 million low-income borrowers will see their monthly payments drop to $0, eliminates the 澳洲幸运5官方开奖结果体彩网:capitalization of unpaid interest (so as long as borrowers keep current with their payments), and allows borrowers with balances of $12,000 or less to receive loan forgiveness after 10 years of payments.

Economic Impact of Debt Cancellation

The sheer size of student debt can be characterized as a weight on the U.S. economy as well as a burden on the millions of individuals who owe it. The federal government holds over $1.6 trillion in student loans, compared with an estimated $130 billion held by 澳洲幸运5官方开奖结果体彩网:private lenders.

Pros and Cons of Debt Cancellation

Research from the Center for American Progress suggested that 澳洲幸运5官方开奖结果体彩网:wiping out student debt would have minimal effects on inflation while helping workers "build wealth, and reduce the racial wealth gap, immediately improving financial security and laying the foundation for faster upward economic mobility."

A 2018 study from the Levy Economics Institute at Bard College estimated that outright debt cancellation would boost 澳洲幸运5官方开奖结果体彩网:gross domestic product (GDP) by $86 billion to $108 billion per year.

However, detractors warned of the risk of 澳洲幸运5官方开奖结果体彩网:moral hazard caused by implying that the cost of your decisions would be borne by someone else. This would lea🧔d to even higher student debt burdens as borrowers assumꦯe additional forgiveness would be forthcoming.

The Committee for a Responsible Federal Budget argued that student loan forgiveness would have, at best, provided only a weak 澳洲幸运5官方开奖结果体彩网:stimulus to the economy. The group believed that for every dollar of loan forgiveness, just 2 to 27 cents of economic activity would be generated.

The Bottom Line

Most students who attend co𓂃llege are hoping to earn a degree that will dramatically increase their earning power after graduation. However, for many adults, much of that earnings will have to go toward paying back student loans. This is a heavy burden to carry, especially before someone has earned their first professional paycheck.