A college degree is a common requirement for many of the highest-paid jobs and professions. On average, college graduates can expect to earn around $1.3 million more than their high school graduate counterparts throughout their working lives (Fay, n.d.). Aside from potentially leading to higher earnings, a college education is also linked to lower unemployment rates (U.S. Bureau of Labor Statistics, 2019) and longer life expectancies (Sasson, 2016).
However, the cost of a college education has steadily increased over the last several years (Hess, 2019). As it continues to rapidly rise, so do student loan debts, which have reached “disquieting record levels for both graduates and governments (Chamie, 2017).” It is estimated that at least one in five adult Americans has a student loan debt (Chiwaya, 2019).
This article lays down the crucial facts and figures that shape the trends revolving around the growing debt of students and graduates. It aims to help students make wiser decisions before taking out a student loan. This article may also assist other readers who wish to better understand how the rising student loan debts impact the nation’s people and economy.
The Rising Cost of Higher Education in the USA
The U.S. is among the world’s most popular destinations for quality higher education. However, it is also one of the most expensive. Higher education costs are among the fastest-rising in today’s American society.
- Between 1980 and 2017, there was a 344% increase in American public university tuition costs (from $2,119 to $9,410).
- Meanwhile, private college education saw a 241% increase in costs, from $9,500 in 1980 to $32,410 in 2017.
- For the sake of comparison, food and electricity costs increased by 150% over the same period, while gasoline prices increased by about 200%.
The Average Cost of an Undergraduate Degree in the U.S.
For any student looking to get quality higher education in the U.S., they should look at these figures to get an idea of how much it will cost them to earn a U.S. degree.
- In the USA, tuition fees range between $5,000 and $50,000 per year.
- According to HSBC’s The Value of Education report (2018), students report that they spend an average of $99,417 throughout the course of their U.S. degree.
- When charging students, American universities typically differentiate between in-state and out-of-state students. In 2019, the average annual cost to attend a two-year course at a public university was $12,720.
- Meanwhile, a public four-year course will set an in-state student back by $21,950
- An out-of-state student can expect to spend an average of $38,330 for a public four-year undergraduate degree.
- On the other hand, a four-year degree at a private non-profit university costs an average of $49,870 per year.
Non-Tuition Costs That Add to College Students’ Expenses
Studying comes with other costs besides tuition fees. These are the top non-tuition costs U.S. students often encounter.
- The cost of higher education goes beyond tuition fees. According to HSBC’s The Value of Education report (2018), next to tuition fees, the biggest expenses of students are accommodation, food (groceries), and utilities.
- In general, accommodation costs are less expensive in the U.S. Midwest region compared to the East and Northeast regions. On average, rent for a one-bedroom rural area apartment starts at $500 monthly. One-bedroom apartments in urban areas can cost as much as $3,500 per month.
- On-campus accommodations, on the other hand, cost around $5,000 to $8,000 including utilities and other housing costs. A dormitory room can be typically shared by two to three people.
- In the academic year 2017-2018, the annual average cost for room and board at U.S. universities was $10,869.
- Other essential expenditures include internet service, which may cost $35 to $60 per month. Monthly phone service generally costs around $50. Those who commute around town typically need to spare $50 to $60 monthly. Moreover, academic books and supplies cost around $400 per semester.
Student Debt Increase Rate
Now that the cost of getting a college degree in the USA has been established, it is time to look at how most students fund their education: student loans. Student debt has been increasing in the past several years as education costs also continue to rise. However, unlike other types of debts, a student loan cannot be easily discharged by filing bankruptcy based on federal rules (Millera & Nikaj, 2018). Here are some striking data.
- As tuition fees in the USA can go upwards of $50,000 a year, it is common for four-year degree students to graduate with a six-digit worth of debt.
- The student loan debt rate has been accelerating quickly over the last several years. It has become not just a burden to students and their families, but even the U.S. economy as well. According to data from the Federal Reserve Bank of New York, as of 2017, borrowing for higher education has doubled within only eight years.
The Extent of Student Loan Debts
Below are more statistics that show the extent of student loan debts.
- There are now around 45 million student loan borrowers who collectively owe almost $1.6 trillion worth of debt in the U.S.
- Most of the borrowers have debt between $10,000 and $50,000.
- The average amount of debt per student is $32,731, with a median of $17,000.
- The average student loan payment amount is $393, with a median of $222 on a monthly basis.
- Student loan debt is dubbed as the second-highest consumer debt category. Mortgage debt takes the top spot, while credit card debt and auto loans come after student loan debt.
- Based on figures from the Institute for College Access and Success, members of the Class of 2018 have an average student loan debt of $29,200, which showed an increase of 2% from the year prior.
- For the academic year 2018-2019, around $186.9 billion worth of undergraduate student aid was granted in the U.S. Out of this, $54 billion were from federal loans, $52 billion from institutional grants and $28 billion were from federal Pell grants.
- Meanwhile, a total of $59.2 billion worth of aid was granted to graduate students during the 2018-2019 school year. Out of this amount, $38.8 billion were in the form of federal loans, $12.2 billion from institutional grants, and $4 billion from private and employer grants.
Student Loan Debt By Education Level and Discipline
It is also worth noting that it is not just undergraduate students who finance their studies through student loans. Based on the latest data available, here are vital student loan statistics by education level and field of discipline.
- According to the National Center for Education Statistics (NCES), the average graduate school student debt during the academic year 2015-16 was $71,000, not counting outstanding undergraduate loan debt.
- When undergraduate student loan balance is factored in, the average increased to $82,800.
- A master’s degree student will graduate owing an average of $64,800.
- Students who took professional degrees, which are often longer programs, could very well leave school owing around $183,200.
- The NCES also estimates that non-teaching Ph.D. graduates owe an average of $98,800, including debt from taking their previous degrees.
- The average debt among those who earned medical doctorates was $246,000.
- Meanwhile, those who took other non-Ph.D. doctorate degrees had outstanding debt averaging $132,200.
- In general, student debt amount varies widely depending on the student’s degree. Below are the averages for some of the top professional graduate degrees.
Student Loan Debt By Institution
Student loan statistics vary from institution to institution, and concerned stakeholders can better grasp the state of education financing by looking at these figures and facts.
- As of the academic year 2017-2018, the average amount of debt is higher for those who graduated from private institutions ($33,148) than those who graduated from public colleges ($26,777).
- The overall average graduate debt for the same period was $29,456.
Furthermore, many students dream of attending leading universities in the United States. Unfortunately, these institutions are also among the most expensive. Although most of the universities have programs that help ensure students graduate with as little debt as possible, many students still graduate with a considerable amount of debt.
- The average debt of Princeton University students is $9,059.
- Harvard University student borrowers owe an average of $13,372.
- Meanwhile, Yale University students have a cumulative student loan average of $14,575.
Student Loan Data By State
Student loan amount averages also vary depending on location. Here are the latest figures.
- States with larger populations, unsurprisingly, also had the biggest shares of student loan borrowers. The top five states with the most borrowers are California (3.8 million), Texas (3.4 million), Florida (2.5 million), New York (2.4 million), and Georgia (1.6 million).
- Meanwhile, Connecticut holds the highest average student loan amount per student ($38,669) as of 2018.
- Utah has the lowest loan debt average per student at $19,728 as of 2018.
Student Loan Data By Type of Loan
There are various types of student loans available in the United States. These come in varying repayment and interest structures. The U.S. Department of Education oversees the disbursement of student financial aid in the form of these loans. Below are the recorded amounts of outstanding student loan debt per type of financial aid as of 2019.
- Stafford combined – $767 billion
- In consolidation – $508 billion
- Stafford unsubsidized – $489.6 billion
- Stafford subsidized – $277.5 billion
- Parent PLUS – $88.9 billion
- Grad PLUS – $67 billion
- Perkins – $7.1 billion
Student Loan Default, Delinquency, and Forgiveness
Unfortunately, not all those who graduate with student loan debt are able to repay their loans as planned and scheduled. Here are figures related to student loan default, delinquency, and forgiveness.
- According to data from the Federal Reserve and New York Federal Reserve, as of Q3 2019, student loan default or delinquency rate is at 10.8% for loans that are over 90 days delinquent.
- The amount of direct loans in default is around $119.8 billion, which is from around 5.5 million borrowers.
- Direct loans in forbearance, on the other hand, amount to around $122.9 billion, which is from 2.8 million borrowers.
- As of 2019, student debt amounting to around $43.9 billion is in the grace period.
- Meanwhile, around $124.3 billion is in deferment.
- Student loan forgiveness comes in various forms, but the most popular is public service loan forgiveness. As of September 2019, there are a total of 1,195,497 public service loan forgiveness borrowers, according to the U.S. Department of Education.
- Under the program, the total amount of loan forgiven is around $71.9 million.
Student Loan Repayment Facts and Figures
Students take out loans to finance their studies in the hopes that their education will eventually help them land their dream jobs, get hired for high-paying positions, or establish their own practices and businesses, which will then earn them enough to repay their loans. However, it is not very easy for the majority of borrowers. Here are some related facts and statistics.
- The majority of outstanding student debt is in repayment. As of 2019, the estimated amount of student loan debt in repayment status is $623.7 billion.
- Only 2% of student loan borrowers estimate to repay their loans in less than a year.
- Eighteen percent of borrowers expect to repay their loans in 6 to 10 years.
- Seven percent of borrowers think it will take them more than 30 years to fully repay their student loan debt.
- A striking 16% think they will never get to repay their debt off.
- Ten percent of borrowers do not know if they will ever repay their student loan debt.
Data based on those who were able to repay their loans show hope, however.
- The majority of borrowers (46%) repaid their loans within 1 to 5 years.
- Eight percent were able to pay off their debt in less than a year.
- Twenty-six percent repaid their loans within 6 to 10 years.
- None of the borrowers who paid their debt exceeded 30 years.
Student Loan Debt Trends and Predictions
Student loan debt is a 1.6 trillion-issue, and it is disgruntling to think that this debt is shouldered by U.S. students and graduates who simply wanted to acquire quality education and enter the workforce with leverage. As both education costs and student debt rates rise, an action clearly needs to be taken.
Over the past three decades, the financial returns to investing in a four-year bachelor’s degree have significantly increased, compared to completing a two-year tertiary course or a secondary education (Lindley & Machin 2016). Simultaneously, however, the responsibility to finance college/university education has considerably shifted from federal taxpayers to the students and their families (Callan & Finney, 1997, as cited in Woo & Lew, 2020).
Americans’ opinions on whose fault is it that student loan debt continues to increase also vary. Older generations tend to put blame on the borrowers, while GenZers and Millennials see the government, lenders, and universities as responsible. Because of this, as to what action needs to be taken could be up for debate (Duffin, 2020).
Access to free public college emerges as the most popular solution to lower student debt. However, funding higher education through taxes, although standard in other countries, is unlikely to be practiced in the United States in the near future.
Furthermore, as the U.S. economy shrinks at its fastest rate since 2008 due to the COVID-19 pandemic (BBC News, 2020), it is not difficult to see student loan default rates quickly climb. More than 26 million people in the U.S. have already filed for unemployment and it is highly likely that most of those people have outstanding student loan debt.
U.S. Student Loan Debt Crisis: An Education and Economic Issue
There is no doubt that higher educational attainment brings forth a number of positive outcomes. This is why getting a college degree is important for individuals hoping to get better employment prospects and wages. Furthermore, having more educated citizens is also a good sign for a country’s stature and economy.
However, as more students and graduates struggle to fund their education and pay off student loan debt, what does it say about the system in general? Are we brewing educated but financially-burdened citizens?
The student loan debt crisis in the USA is not merely an education issue. For the most part, it is an economic concern that can only be solved through cooperation and a genuine will to eradicate the problem.
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