Today, people spend a lot of money on African photo safaris, the newest phone, fancy soap, and more. And school? Scholars in the United States spend an average of 2.2 percent extra every year above and above inflation, which works out to an additional $200 per year in tuition expenditures.
Average costs for a public, four-year college, including room and board and other fees, for the 2019-20 school year came in at just over $21,900. In the third quarter of 2019, as many as 42.2 million students and their parents took out loans to pay for college. That’s a lot of money, but it’s not surprising that so many people took out loans for school.
Many of them have debt from college, but do you know how much you know about it? It can be right up there with politics and religion on the list of things that no one wants to talk about. Any idea which states have the most student loan debt? It could also be how much total money Americans owe on their college loans.
When people don’t pay, what about that? More than just those answers have been gathered by us. The number of people who answered may surprise you. Why? Because no matter how big or small your student loan debt is, it is a big deal.
The US student loan debt currently surpasses $1.6 trillion.
That was the total student loan debt in the US in February 2020. A decade ago, it was just half that: $695 billion. Student loans are currently the second-largest debt in the United States, behind vehicle loans and credit card debt.
Want to hear the good news? That seemingly impossible number is getting some attention. Many people who want to be president in 2022 want to get rid of student debt, and many billionaires are paying it forward by paying off student debts at their old high schools.
Non-public individuals are also affected. If an employee was paying at least 2% of their income toward student debt, Abbott Laboratories might contribute up to 5% of their 401(k) salary. Student debt repayment might now be used to recruit and benefit workers.
The average amount owed on a student loan is above $35,000.
The average student-loan debtor today owes about $35,359, up 2% since the first quarter of 2018. My generation, Gen Xers, has the most money, with a balance of about $40,000. As of this writing, Boomers were in second place with balances of around $34,703, and Millennials were right behind them. However, Gen Z debt holders have balances of around $12,500.
Individual debts are very different.
The average debt is just that: the average, not the best or worst of all. People’s student-loan balances aren’t the same based on their age, state, or program. Almost all people who borrow money owe between $10,000 and $25,000; some accounts have balances as low as $100 and others with amounts as high as $200,000.
This may not be a surprise when you think about how much it costs to go to college. There were a lot of very expensive schools in the United States in 2018. Harvey Mudd College in California was the most expensive at about $75,000 a year for tuition and fees in 2018. Then there are a few schools, like Berea College in Kentucky, don’t charge for college.
The amount of student debt owed now varies greatly by state and institution.
There was a lot of debt in Washington D.C., even though it’s not a state. It had an average of $55,729, which was more than the next highest state on the list: Georgia had an average debt of $41,692. Top or bottom of the list? Wyoming is at the bottom (or top, depending on your point of view). North Dakota, South Dakota, and Iowa are also at the bottom. All have less than $30,000.
Similarly, the program that students choose can greatly impact how much debt they have when they finish college. Conditional on the type of graduate school you want to go to, the cost can be very different from one to another. For example, specialized degrees like medicine, law, or pharmacy could leave students with even more debt, sometimes up to $100,000.
Everywhere, percentages are rising.
State-by-state, every one of them saw a rise in the average student loan debt from 2018 to 2019. This was true no matter how high or low a state was on the list. Several individual borrowers also rose across the board, including an increase in the number of students with student loans over 62.
Multiple loans are common among Americans with educational debt.
The Department of Education has a few different loan servicers working for them. When the federal student loan is paid out, it will be sent to a loan servicer. People who have a lot of student loans may have a lot of loan servicers. That could be a lot to keep track of, which is why some people think about consolidating their federal student loans. Federal student loan borrowers with at least one loan in deferral or forbearance, two alternative options to postpone repayment, account for more than 6 million people.
Borrowers who default on their college loans are in the thousands.
A study done in 2018 found that about 1 million people default on their student loans each year. By 2023, that figure is awaited to rise to 40% of all borrowers, which is a lot. A credit card balance, a car payment, or a mortgage could be signs that you might not be able to pay back your scholar loans. Even if people don’t pay back loans, they may also be at risk of having other medical bills go into collections.
What should I do? Student loans will not go away even if you don’t pay them back for the rest of your life. In the meantime, interest will keep adding up and building up. To see if refinancing your student loans makes sense for you, you can now look at how much interest is loaded on your loans.
The idea of refinancing isn’t for everyone, but it can be worth thinking about. It can help you save money. Think about this: If you move federal student loans to a private lender, they won’t be eligible for government programs like income-driven repayment plans or Public Service Loan Forgiveness.