Fed Ready to Adopt New Student Loan Payment Plan

Obtaining a college degree is generally positively correlated with an individual receiving higher earnings in their career. However, the cost of attending college is rising and students are taking on more and more debt in the form of federal and private loans to cover the cost of their education. Mounting debt could potentially lead to limiting career options and could even delay other life goals. The student loan debt crisis impacts nearly 44 million Americans who share $1.63 trillion in federal student loan debt.

As the Supreme Court deliberates student loan forgiveness plans, payments are scheduled to resume in July 2023. The federal government aims to adopt a new student loan repayment plan that reimagines how borrowers repay their loan and will likely be the most affordable repayment plan for most borrowers. President Biden’s new income-driven repayment plan would permit borrowers to dissolve remaining debt after 20 years of continual payments. 

BestColleges recently reported the most updated statistics on student loan debt, offering a unique view on average student loans as it relates to different demographics and other common debts students take on. Below we explore the statistics and some key takeaways. 

Key Findings:

  • At the end of 2022, the average federal student loan debt in the U.S. was $37,574.
  • In 2017-2018, the average student loan debt for a four-year bachelor's degree was $26,190.
  • At the end of 2022, the total federal student loan debt balance was just over $1.63 trillion. 
  • The total student debt balance — including federal and private loans — was more than $1.76 trillion.
  • Federal student loan debt has nearly tripled since 2007.
  • 3 in 10 adults took on debt to pay for college
  • On average, women carry more student debt than men; Black borrowers have higher student debt levels than borrowers of other races; and people who attended for-profit colleges have higher student debt levels than those who attended public and nonprofit schools.

In 2022, according to the Department of Education, the average student loan debt for federal loans was $37,574, which is approximately $1.63 trillion of outstanding debt divided by a total of 43.5 million borrowers. However, there is considerable variation between what borrowers owe on an individual basis.

The average federal student loan debt has more than doubled since 2007, from $18,233 in 2007 to $37,575 at the end of last year. Between 2010 and 2020 alone, the average federal student loan debt grew by about 40% in a decade. This ballooning mirrors the rise of the total cost of college over the years, not accounting for inflation.

Student loan debt refers to federal student loans and private student loans, and does not include or account for other education-related debt such as credit card debt, home equity loans, and other loans that students or their parents/guardians may use to pay for school. The federal student loan debt balance in the U.S. has almost tripled in the past 15 years.

Who Has Student Loan Debt? 

  • As of 2021, 30% of all adults have incurred education-related debt.
  • Of adults who went to college, over 40% went into debt for school.
  • 20% of adults who went to college still carry student debt.
  • By the end of 2022, 43.5 million people owed money on a federal student loan.

While many students take out student loans, debt amounts vary according to race/ethnicity, gender, age, and degree type, among other characteristics. Data indicate that:

  • The racial wealth gap creates inequities in higher education and perpetuates trends whereby Black students carry more debt. 
  • Women have higher student debt levels than other genders. 
  • About 80% of federal student loan borrowers are aged 25-49.
  • Graduate students are more likely to take out a federal student loan than students pursuing other degrees or certificates.

College affordability remains a primary concern for prospective and current students. Individuals must weigh the benefits of obtaining a degree against the rising costs of education, while also educating themselves on student loan data. To retain current students and attract new students, higher education institutions must offer both affordable and meaningful education paths and maintain transparency for students’ financial options and repayment plans.