If you’re reading this, you probably know that student loan debt is incredibly high right now. And it’s only growing. You probably also know that there’s actually so much student loan debt that it’s hard to even conceptualize the cost of higher education nationwide.
General Student Loan Debt Statistics
Well try these student loan debt statistics on for scale. Just the interest on student loans is growing at a rate equal to the cost of building a new public high school ($45M) every 5 hours. Or how about, all student loan debt is the amount of money it would take to cover the roofs of 71% of American homes with enough solar powers to fully power the respective homes. However you cut it, student loan debt is a major economic force that most Americans who attend college or university are a part of. Luckily, individuals who are knowledgeable about student loans and their higher education financing options often fare much better when it comes to avoiding or alleviating long term debt.
Student Loan Debt Statistics for Individual Borrowers
Student loan debt statistics for individuals are a little easier to conceptualize, though potentially no less shocking. In late 2016, the average student loan debt for graduates of universities topped $30,000 for the first time. This statistic mixes students who attended all sorts of schools and program types. So even though that’s shockingly high, it shouldn’t be used a rule of thumb that you have to go into that much debt to go to school. Broken down into type of degree, the average amounts of debt are as follows:
Average Federal Student Loan Debt by Institution Type:
As explained in our description of common loan types section below, many Federal student loan types allow for graduate students to borrow up to the entire cost of their academic program. This contributes to the higher average Federal student loan debt for graduate students. And even though graduate students are likelier to borrow more money for their schooling, they’re also less likely to default on their loans.
Statistics on Types of Federal Aid that Supplement Student Loans
While student loans often get the most attention when it comes to discussions of financial aid for students, there are a number of other Federal programs for financial aid: grant, loan, tax-based, and work programs. The latest statistics point to these programs help an estimated 13.8 million students each year (and growing). It is often advised to exhaust all options for Federal and state grant aid and tax benefits before looking to Federal student loans. And to exhaust all Federal student loan options before private loans options. Here are the most common types of Federal Financial Aid Types not limited to loans, there are many options for funding your education! Type \ Number of Recipients \ Average Amount of Aid
Federal Education Tax Benefits \ 13.8 Million \ $1,320
Federal Pell Grants \ 7.6 Million \ $3,720
Direct Subsidized Loans \ 6 Million \ $3,800
Direct Unsubsidized Loans \ 7.3 Million \ $6,980
FSEOG \ 1.6 Million \ $450
Federal Work Study \ 632 Thousand \ $1,550
Post 9/11 G.I. Bill Veteran Benefits \ 848 Thousand \ $14,570
Statistics on Types of Federal Financial Aid by Income of Family
Typically the types of student loans and financial aid students receive depends on the income of their family, or their estimated financial need. Federal grants are known as one of the most effective ways to help lower income students attend institutions they would otherwise not be able to afford. While Federal education tax benefits are likelier to lower the burden on higher income families. Federal Pell Grants which are available to low and moderate income students make up 26% of all grant aid received by students. With the average Pell Grant equaling $3,720 in aid, this is a large portion of most in-state tuition for most low income students. Meanwhile, 57% of tuition tax deductions go to families with adjusted gross income of $100,000-$180,000. This tax deduction, however, is not incredibly large, and comes to an average tax savings of $400 for families who claim it. With this said, the latest student debt statistics point to the fact that a majority of Federal financial is in the form of student loans.The efficacy of grants at helping lower income students is that it lowers the total amount that needs to be borrowed on top of grants to cover cost of schooling. If the amount that needs to be borrowed through loans can be lowered to below what can be covered by subsidized Federal loans (before resorting to private student loans), good graduate financial outcomes are much likelier.
Loans in Delinquency and Default
Some of the most touted student loan debt statistics involve the extent to which delinquency and default on student loans hurts individuals and the broader economy. Today, more student loan dollars are in default and delinquency than every before. Below are five terms you need to know to understand the stages of payment (or lack of payment) on student loans: Important Student Loan Payment Status Definitions:
Grace Periods: grace periods are signed into most loans and allow for you to miss payment for a certain amount of time before a penalty is applied. Some student loans have generous grace periods, like the Stafford Loan, which offers recently graduated (or dropped out) students to have six months before they begin payment on their loans.
Deferment: for a number of reasons borrowers may file a formal request to defer loans. Deferment allows borrowers to temporarily postpone payments. For Federal loans that are subsidized (see below), interest does not accrue during deferment.
Forbearance: forbearance may be granted by lenders to borrowers who are willing to make payments but unable to due to financial hardships. In forbearance monthly payment amounts are lowered or payments are entirely postponed, though interest continues to accrue on the loan.
Delinquency: delinquency occurs on the first day you are late on a payment unless you have made arrangements for deferment or forbearance. Delinquency will remain on your record until you have paid the past due amount. For Federal student loans, if you become 90 days delinquent, your delinquency is reported to the three major national credit bureaus, which will negatively affect your credit score.
Default: default involves failing to pay a student loan according to your promissory note. For most Federal student loans, default occurs when you have failed to make a payment on your loan for 270 days. There are ways to rehabilitate a Federal student loan in default with various pros and cons.
Shocking Student Loan Statistics on Delinquency and Default
1.1 million student loan borrowers defaulted for the first time in 2016.
In total, about 8 million borrowers are in default.
This means that 1/6 borrowers are currently in default
In total, there was a 14% increase in defaults on student loans in 2016. This surprised experts who had thought the improving economy would translate to heightened ability to pay loans across borrowers.
While there is an astronomical amount of student debt that is in delinquency or default, most borrowers are able to find a payment plan that works for them and steadily pay off their loans. Below we’ve listed some definitions of the most common repayment plans as well as some statistics on average repayments.
Common Repayment Types
Standard Repayment Plan: a fixed monthly payment with a minimum of $50 a month, for a ten year period if the loan is large enough.
Extended Repayment Plan: extends the payment period from 10 to between 12 and 30 years though elevates the total cost of repayment through interest.
Graduated Repayment Plan: graduated payment plans often offer the same payment period range of extended repayment plans: 12 to 30 years. These payments plans start out with a lower payment and graduate to higher payments. The lowest payments are limited with a minimum of 50% of the payment of a standard plan. While the highest payments are capped with a maximum of 150% of the payment of a standard plan.
Income-Contingent Repayment Plan: income-based repayment plans are available for Direct loans. They are 25 year term repayment plans and have the remainder of the loan balance discharged after 25 years if any is left. The payment amount is based on total amount of debt and income.
Income-Sensitive Repayment Plan: these payment plans are available for FFELP loans, and cap the percentage of monthly income of a borrower that may be billed. Term length is 10 years.
Income-Based Repayment Plan: these payment plans are similar to income-contingent plans, but cap the payments at a percentage of income with a stricter definition of what entails discretionary income.
Revised Pay-As-You-Earn (REPAYE) Plan: this plan builds on the traditional income-driven plan from the Department of Education but factors in additional considerations to make it available to a wider audience. Payment is capped for this plan at 10% of your discretionary income after 150% of the Federal Poverty Guidelines for your family size. Loans are forgiven after 20 years of payment. Another note is that there is no cap on the maximum you can pay per month (if you have a high income).
(Source) Average Repayment Statistics for Student Loans
The average student loan payment in America is $351 per month.
While there has been a 280% increase in average student loan balances since 2005, there has only been a 50% increase in student payment amounts.
Student loan interest is often compounded daily. This means that if you have an annual interest rate of 5%, your interest rate compounds daily at a rate of 5%/365 or .0134% per day. If you have $10,000 of student debt, this means that you pay $1.34 in interest daily, or $40 a month in interest.
The average student takes 21 years to pay off their student debt.
Student loan usage has largely corresponded with two trends in recent years:
The rising costs of higher education
The general economic recovery of America since the Recession
The first trend above helps to explain the astronomical amount of total student loan debt. For close to 30 years, the cost of higher education has accelerated faster than any single other major common purchase. The second trend above, however, has led to an overall decline in student loans taken out for the last five consecutive years. Notable, while undergraduate student loan borrowing has declined, graduate school borrowing has increased. This is generally a sign of families having more money to help their children to pay for undergraduate degrees, and graduate students having more faith in the economy and their job prospects to justify borrowing more. As a large majority of higher education students in America are undergraduates, the declining amount of borrowing from undergraduates has led to a lower total amount of borrowing per year (even as graduate borrowing increases). Furthermore, the performance of the economy has led to stronger endowments for many universities, which has led to an increase in the percentage of financial need that has been met by grants and scholarships.
General student loan trend statistics
Since 2007, College Tuition and Fees costs have accelerated more than any major category of spending including medical expenses, housing costs, food, clothing, new cars, or childcare.
College Tuition and Fees have increased in price by a whopping 170% since 2007. Yes, that means that college tuition and fees are almost twice as expensive as they were 10 years ago.
The second fastest increasing cost is closely related to College Tuition and Fees and falls into the broader education category. Education costs are 51% greater than they were in 2007.
Compare both education and college tuition and fees costs to another category of spending that has skyrocketed: housing. Housing costs have gone up just a third of what education costs have gone up, and are accelerating at an even slower rate compared to college tuition and fees.
Stafford Loans are the most popular form of undergraduate and graduate student loans. If your school participates in the William D. Ford Federal Direct Loan (Direct Loan) Program, then you are eligible for Stafford Loans. There are two main types of Stafford Loans: Subsidized and Unsubsidized.
Stafford loans are guaranteed by the US Federal Government, and thus often have lower interest rates than private loans. Only available at accredited, American institutions of higher learning, Stafford loans are available directly (known as DIRECT loans) through the United States Department of Education. Payments on loan principal for Stafford loans are not required for students who are in school at least half time. The interest on Stafford Subsidized loans (unlike unsubsidized Stafford Loans) is paid by the Federal Government while students are in school or during authorized deferral. Subsidized Stafford loans have been unavailable for graduate and professional students since 2012, though are still one of the largest student loans by amount loaned in total.
Like Stafford Subsidized loans, Stafford Unsubsidized loans are guaranteed by the US Federal Government, and often have much lower interest rates than private loans. Principal payments are not required for those taking out Stafford Unsubsidized loans while in school at least half time. Unlike Subsidized Stafford loans, Unsubsidized Stafford lines do accrue interest while students are in school. Stafford Unsubsidized loans are available to undergraduate and graduate students and does not require a demonstration of financial aid.
Stafford Borrowing Limits:
As previously mentioned, Subsidized Stafford Loans are based on income and financial need, while unsubsidized are not. All dependent students who quality for Subsidized Stafford Loans may borrow up the following amounts by year of schooling. All dependent students, regardless of financial need may borrow up to the following in Stafford Unsubsidized Loans.
Freshmen: $5,500 of which a maximum of $3,500 may be subsidized
Sophomores and Juniors: $6,500 of which a maximum of $4,500 may be subsidized
Seniors or Fifth-Year Students: $7,500 of which a maximum of $5,500 can be subsidized
All independent students or dependent students whose parents do not qualify for PLUS loans may borrow up to the following amounts:
Freshmen: $9,500 with a maximum of $3,500 may be subsidized
Sophomores and Juniors: $10,500 of which a maximum of $4,500 may be subsidized
Seniors and Fifth-Year Students: $12,500 of which a maximum of $5,500 may be subsidized
Direct PLUS Loans
Direct PLUS Loans are Federal student loans for students who are in graduate or professional school. Parents of students who are attending graduate school may also take on Direct PLUS Loans on behalf of their child. If your school participates in the William D. Ford Federal Direct Loan (Direct Loan) Program, and you or your child are in graduate school then you are eligible to apply for Direct PLUS Loans. For 2017-18 they are offered with the fixed interest rate of 7%. These loans have an additional fee of 4.276% of the total loan taken out before the loan is disbursed. Though on the plus side, borrowers may take out the total cost of attendance minus other financial aid, and no co-signer is needed for many Direct PLUS Loans. These loans do, however, require that the borrower not have an adverse credit history. If you have an adverse credit history, you may still qualify for a Direct PLUS Loan with a co-signer. Loan payments are deferred for as long as graduate students are in school at least half-time, and Grad PLUS Loans offer multiple repayment plans including income-based repayment.
Note: Direct PLUS loans include what are commonly known as Grad PLUS Loans and Parent PLUS Loans.
Direct PLUS Loan Repayment Plan Options:
Income-Contingent Repayment (ICR)
Income-Based Repayment (IBR)
Pay-As-You-Earn Repayment (PAYE)
Revised Pay-As-You-Earn Repayment (REPAYE)
Federal Family Education Loan Program
Though there is still a lot of unpaid student debt issued through the FFELP Federal student loan program, loans are no long issued through this program (as of 2006). The FFELP program was comprised of Stafford Loans, PLUS Loans, and Consolidation Loans. This program has now been replaced by the DIRECT Loan program that is described above.
Federal Perkins Loans
The Federal Perkins Loans program is the second Federal Loan program, with the first being Direct Loans offered under the William D. Ford Federal Direct Loan Program. Perkins Loans are for students who have demonstrated exceptional financial need. Unlike Direct Loans, where your lender is the Federal Government, with Perkins Loans your lender is your school. Not all schools participate in the Perkins Loans Program. So if you would like to utilize this low interest rate student loan, it is best to choose a school that participates in the program. For 2017-18 the interest rate of Federal Perkins Loans is capped at 5%. Both undergraduate and graduate students who meet criteria and attend participating schools are eligible for receiving Perkins Loans.
Note: Perkins Loans are only available at schools that participate in the program. The total amount of funds available to lend to students in Perkins Loans varies by school. So it is best to apply for financial aid early before Perkins Loans funds are used up.
Perkins Borrowing Limits:
Undergraduate Student Perkins borrowing is capped at $5,500 per year, and at a total amount of $27,500 for the entire program.
Graduate Student Perkins borrowing is capped at $8,000 per year, and at a total amount of $60,000 for the entire program.
Consolidation Loans bundle several student or Parent loans often making loan payments more manageable. Depending on your portfolio of borrowed loans, however, overall interest rate may rise slightly. Federal loans eligible to become consolidation loans include Stafford, PLUS and SLS, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Private students loans may also be consolidated by some private lenders. Both parents of students and students may consolidate loans. Interest rates for consolidation loans are the weighted average of loans of the loans being consolidated rounded up to the nearest 1/8th of a percent. Interest rates for consolidation loans are fixed for life. Consolidation loans make borrowers eligible for alternative repayment plans. Alternative repayment plans often lower monthly payments though cost more over the life of the loan due to increased interest.
Private Student Loans
Private student loans are not funded or subsidized by the Federal Government (like all loan types previously mentioned in this section). These loan types often do not allow protections or flexible repayment terms offered by Federal student loans. Private loans are funded by banks, credit unions, state loan programs, or other lenders. Private student loans often have variable interest rates that change monthly or quarterly. Variable interest rates may unexpectedly change your monthly payment. Many sources advise students to pursue all options for scholarships, grants, work studies, and other forms of funding before exploring the option of taking our private student loans.
Student Loan Portfolio Statistics
Wondering how common different loan types are? We’ve compiled the latest statistics available on the national student loan profile. Student loan statistics below are from the third quarter of 2017.
Federal Student Loan Statistics on Borrowers and Amount by Federal Loan Programs
Program \ Total Amount Borrowed \ Number of Borrowers
Stafford Combined Loans \ $720 Billion \ 32.2 Million
Consolidation Loans \ $472 Billion \ 12 Million
Stafford Unsubsidized Loans \ $450 Billion \ 27.6 Million
Stafford Subsidized Loans \ $269 Billion \ 29 Million
Through student loan refinancing, borrowers can refinance high-interest student loan debt and potentially score a lower rate, saving thousands of dollars in interest over time. Those savings can then go toward extra payments to get out of debt even faster. Additionally, borrowers can select a longer term to obtain a lower monthly payment as well.