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The cost of a college education has steadily increased over the past 30 years. During this period, tuition at public four-year colleges rose from $4,160 to $10,740 and from $19,360 to $38,070 at private, nonprofit institutions (adjusted for inflation). As costs have risen, so has the need for student loans and other forms of financial assistance.
Today, more than half of students leave school in debt. Here’s an overview of how much the average student borrows, the most common types of loans, and how those loans are repaid.
Average student loan debt
- $1.75 trillion in total student loan debt (including federal and private loans)
- $28,950 owed per borrower on average
- About 92% of all student debt is federal student loans; the remaining amount is made up of private student loans
- 55% of students at public four-year institutions had student loans
- 57% of students at four-year private nonprofit institutions have student debt
Sources: Federal Reserve, The Institute for College Access and Success, College Board, MeasureOne
States with highest and lowest average student debt
Source: The Institute for College Access and Success
Federal Student Loan Portfolio
Federal student loans make up the vast majority of US student debt – approximately 92% of all outstanding student loans are federal debt. The federal student loan portfolio currently totals more than $1.6 trillion, owed by approximately 43 million borrowers. Here’s how that debt breaks down by loan type.
Source: Federal Student Aid
Federal student loans by age
Not surprisingly, young people hold the majority of student loan debt. Borrowers between the ages of 25 and 34 carry about $500 billion in federal student loans — the majority of people in this age group owe between $10,000 and $40,000.
However, people carry their student debt into middle age and beyond. Borrowers between the ages of 35 and 49 owe more than $620 billion in student loans. This cohort has the largest number of borrowers who owe more than $100,000 in loans.
Even retirees are feeling the pressure of student loans; there are 2.4 million borrowers aged 62 or older who owe $98 billion in student loans.
Source: Federal Student Aid
Private student loan portfolio
- $131 billion in outstanding private student loans
- Only 7.6% of all student debt comes from private student loans
- 89% of private loans are for undergraduate degrees; 11% are due for higher education
- 92% of undergraduate private loans are co-signed, 66% of graduate private loans required a co-signer
- Essentially all private loans (99.9%) require school certification, a process by which the school confirms the borrower’s student status and cost of attendance.
Student loan repayment statistics
Since the start of the Covid-19 pandemic, student loan repayments have been disrupted. Federal student loan repayments have been suspended nationwide since March 2020, and the majority of federal loans are currently in forbearance.
At the start of 2020, only 2.7 million borrowers had their federal loans in forbearance. That number had risen to 24 million borrowers by the end of 2021. However, that reprieve is set to expire in May 2022, when federal student loan repayments are expected to resume.
Here are the current repayment statuses of the Federal Direct Lending Program.
Private student loans, on the other hand, have not been given any blanket forbearance option during the pandemic. The majority of private student debt is actively being repaid. In Q3 2021, 74% of private loans were in repayment, 17.5% were deferred, 6% were in grace period and 2.4% were in forbearance period.
Sources: Federal Student Aid, MeasureOne
The federal student loan system offers a multitude of repayment options from which borrowers can choose. Some plans require borrowers to qualify based on income and family size, but other plans are available to anyone.
Here’s how the federal loan portfolio is split among the most popular repayment plans.
Private student loans do not have standardized repayment plans – your options are determined by your specific lender. However, many private lenders offer at least a few plans to choose from. It’s common to have the choice of paying interest only in school, making small lump sum payments while in school, or deferring all payments until after graduation.
After you graduate, most private lenders will require you to make full payments spread evenly over your repayment term.
Sources: Federal Student Aid
Delinquencies and payment defaults
About 5% of student debt was past due or in default by at least 90 days in the fourth quarter of 2021. However, this number is artificially low – federal loans that are currently on forbearance due to Covid -19 are reported as current by the Department of Education. Once regular payments resume, a portion of the suspended loans will be flagged as default.
In the table below, historical data illustrates the number of borrowers past due or in default on their Federal Direct Loans. Direct loans are considered defaulted after 270 days of non-payment. Reporting between 2020 and 2021 is not complete due to Covid-19 forbearance.
When you look at private student loans, delinquency and default rates have steadily declined over the past decade. Here are the historical delinquency rates for private student loans, shown as a percentage of loans in repayment.
﹡Data for 2021 is for the third quarter
Sources: Federal Reserve Bank of New York, Federal Student Aid, MeasureOne
Student Loan Forgiveness
As of September 2021, 10,776 borrowers had successfully had their federal loans canceled under the Public Service Loan Cancellation Program (PSLF). More than $1 billion has been written off, with the average claimant paying around $95,000 in debt. An additional 1.3 million borrowers could be eligible for PSLF in the future, representing approximately $132 billion in debt.
Between November 9, 2020 and September 30, 2021:
- 678,373 PSLF forms were submitted.
- Most employment certification forms were approved — 99.7% met the employer’s requirements.
- Almost all PSLF forms (98%) were refused because the applicant did not meet the requirements. The most common reason for denial was that the applicant had not made 120 qualifying payments on their direct loans.
Sources: Federal Student Aid