Average Private Student Loan Debt

Average Private Student Loan Debt – It’s the fastest growing debt in America, student loans.1 Currently, student loan debt is at an all-time high of $1.58 trillion, and approximately 45 million Americans currently have student loans.2, 3 Wowza! In fact, most college students (65%) graduate with student loans.4 The average student loan debt per borrower is $38,792, with an average monthly payment of $393.5, 6

This is just a snapshot of what is happening with student loans in America today. But read on for the latest student loan research, including:

Average Private Student Loan Debt

Average Private Student Loan Debt

There are two types of student loans: federal and private. in 2022 month of January. 43.4 million of borrowers have federal student loans, meaning their loans are funded by the US Department of Education.7 In fact, over 90% of student loans are federal and fall under three main federal loan programs: Direct Loans. , Federal Family Education Loans (FFEL) and Perkins Loans.8

Average Student Loan Debt Balance Of Borrowers 25 To 34

The FFEL program was the first federal student loan program created in 1965. Although this program was abolished in 2010 (meaning no new loans have been made since then), borrowers still have $230 billion in outstanding FFEL9 program debt. All new federal student loans now come from the Direct Loan Program. And there are three types of Direct Loans: Direct Subsidized Loans (financial need based on FAFSA), Unsubsidized Direct Loans (no proof of financial need), and Direct PLUS Loans (student or parent takes out loans to fill spending gaps after it expires). private loans).

Here’s a breakdown of the amount owed and the number of borrowers for each major type of federal student loan: 10

Federal loan interest rates change over time and vary depending on the type of loan and the disbursement date (also known as the disbursement date). The only exception is Perkins loans, which have a fixed interest rate of 5%.

Federal student loans are currently subject to a temporary 0% interest rate due to the CARES Act. But when that ends, it will be direct loans made from 2021 onwards. July 1 until 2022 July 1, interest rates: 11

President Biden Considers Forgiving Some Student Loans As Many Women Say They Are Drowning In Debt

The pandemic has certainly affected many things, including the student loan industry. Due to the CARES Act, federal student loan payments were put on hold starting in 2020. March. However, this is scheduled to be updated in 2022. September 1

The good news is that interest hasn’t increased while these payments have been ongoing, so it’s a great time to keep throwing money at your federal loan because it all goes straight to the principal! However, not everyone is taking advantage of the situation. From 2022 Quarter I provides the current status of federal student loan debt (including Direct Loans and FFEL Program loans held by the Department of Education).12

While only about 1% of federal student loan accounts are in active repayment, it’s unclear how many people actually continued paying their student loans during the pandemic. However, our 2022 A survey of the state of personal finances found that 6 out of 10 people have student loan debt

Average Private Student Loan Debt

Payments on their loans, and payments were suspended during the pandemic. That means the end of student loan relief is sure to be a rude awakening for many people.

Average Student Loan Debt In The Us By State Exposes A Pattern

) is from a bank, credit union, government loan agency, or any other financial institution. Private student loans are usually more expensive, with interest rates as high as 14.18%.13 In 2022. month of January. private loans make up about 8.4% of all student loan debt, but the balance of private student loan debt is still over $140. billion. 14

So if 45 million Americans have student loan debt, let’s talk about how they’re paying it off (or not).

On average, Americans take 20 years to pay off their college loans, although it can take up to 45 years or more.15 And with an average student loan interest rate of 5.8%, most borrowers (21% to be exact) see their loan balance grow within the first 5 years.16

What does it look like in real life? Also, if you make an average monthly payment of $393 on a $38,792 student loan at 5.8% interest, it will take you 11 years to pay it off. Plus, you’ll end up paying only $14,052.09 in interest!

Average Student Loan Debt

Or if you take 30 years to pay off the same loan (which would be a monthly payment of $227), you’ll end up paying $43,526.30 in interest — more than the original amount you borrowed! Ah.

And if you’re wondering if student loan debt (and all that interest) is worth it, listen up: 44% of high school seniors will enroll in a four-year college, but only about two-thirds of those students will actually attend. graduate .18

19 And if you take out a student loan but don’t graduate, you’ll still have to pay back the loan and interest. Ooo.

Average Private Student Loan Debt

The thing about student loan debt is that people are still paying for college long after they’ve left their alma mater. Americans aged 30-39 have the most student loan debt, totaling $504 billion. USD, but the 18-29 age group does not have 357 billion. In fact, they collectively manage about $25 billion.21

Student Loan Forgiveness Means A Rethink Of Higher Education

But it’s unclear whether all of that amount is related to a degree they later earned, a loan left over from their youth, or money they borrowed to put their children or grandchildren through school.

Fun fact: Student loans started in part as a way to create more scientists and engineers to defeat Russia in 1957. in the space race. in 1958 The National Defense Education Act, which aims to increase enrollment in higher education (especially in science, math and foreign languages), is the most likely driver of the increase in college enrollment from 3.6 million. 1960 up to 7.5 million in 1970 reason. 22

But college attendance isn’t the only thing that’s grown over the decades. As we mentioned before, student loans are the fastest growing debt in America. In fact, since the Great Recession of 2007 alone we’ve seen about a 157% increase.23 Whether it’s because of higher tuition costs (more than double what it was 30 years ago), inflation, or increased societal pressure to go to college. . degree, student loan debt keeps growing. 24

The overall cost of living has also increased over the past 30 years, with the cost of higher education rising much faster than other areas such as health, housing and food. Since 1994 spending on education increased by more than 436%.25

Average Graduate School Debt In 2022

And the more expensive education and the increase in the cost of living are responsible. . . (you guessed it) more student loan debt. Students are more likely than ever to take out loans for their education without weighing the actual costs.

Yes, these numbers can be a little overwhelming (especially if you’re in high school or your kids are about to head off to college), but there is hope. Remember: 1) there are high-paying careers that don’t require degrees, and 2) there are ways to earn a degree debt-free, even with rising costs.

These numbers show the reality of the student loan crisis, but that doesn’t mean it has to be just another statistic.

Average Private Student Loan Debt

In fact, 47% of young adults have delayed buying a home, and 21% even waited until marriage because of student loan debt. track. 28

Black Grads Aren’t Making Bad Decisions About Student Loan Debt

And don’t forget about the $25 billion owed by people 70 and older. Some Americans who should be in their golden retirement years are still saddled with student loans.

According to our own quarterly research, 71% of those who took out student loans to pay for college say they wish they had gotten a better education before taking on the debt. More than half (53%) regret having taken out student loans, and 43%

. And yet, students are told to do whatever they can (including borrowing money) to get a college degree.

Additionally, 22% of borrowers who graduated in the 2015-2016 school year had difficulty paying off their student loans during their first year of college.29 Not to mention, only 40% of those college graduates found gainful employment in their first year. then. graduates, and 44% of graduates found employment outside their field of study.30 It is not clear whether this is due to student loans, but the pressure to pay is certainly not helping graduates pursue jobs they like.

Why Are Student Loan Interest Rates So High?

With so many Americans feeling the weight of student loan debt, everyone is hoping that their loans will be forgiven. But while President Biden built much of his campaign on forgiving at least $10,000 in student loan debt for every borrower, he has yet to follow through on that promise.

In fact, since taking office, Biden has fired more than $15 billion. from closed schools and people working in the civil service. And

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