For the past few decades, student debt has grown significantly, due to the increase in the cost of college. There was a 3% increase in student debt from the year 2020 to 2021. Student loan debt has surpassed all other types of loans in all the U.S states. This has led to intervention by both the Trump and Biden Administration that paused student loan repayment and interest rates on student loans.
We are going to look at how much student debt is there in the U.S and the average student debt in America?
How Much is Student Debt in the U.S?
The average student debt USA stood at $1.76 trillion as of June 2022. Luckily, debt accumulation is slowing down, an indication that borrowers are managing their student loans well. The average student loan debt by a student from a public university is $30,030.
What is the Average Student Debt in America?
The average student loan debt in the U.S is $32,731 according to the Federal Reserve. The following are statistics on average student debt USA.
- Student debt total in U.S (Federal and private) - $1.76 trillion
- Average loan owed per borrower - $28,950
- Percentage of students with loans in the U.S - 92%
- Percentage of students with loans in private institutions - 57%
- Percentage of students with loans in private institutions - 55%
Does Student Debt Affect Credit Score?
Student loans are just like other loans such as personal loans, installment loans, or mortgages. Student debt can affect your credit score just like any other loan can. Your student loan contributes to your credit history and credit mix.
If you pay your student loan on time and in full, it can boost your credit score a lot. Failure to repay your student loan or skipping repayment makes you considered delinquent. However, if you are not in a position to repay, you can arrange for deferment or forbearance.
Student Debt Moratorium
In March 2020, the Covid-19 outbreak weakened the U.S economy, and the former president, Donald Trump introduced a student loan freeze. The student loan freeze paused loan repayments on federal loans and interest accruing from them. Almost all borrowers were eligible for a student loan freeze and only 1% of students continued with repayment.
Also, Biden Administration has been advocating for student loan debt forgiveness. Biden promised to pay $10,000 to all students with student debts.
Related: Money traps to avoid in your 20s.
Student Loan Interest Freeze Extension 2022
The last student loan freeze extension by the Biden administration established a new end date as August 31, 2022. However, there are high chances that the student loan freeze could be extended again. The payment pause and interest freeze only apply to federal student loans.
States with the Lowest and Highest Student Loan Debt
The following is a list of some of the states with the lowest student debt and highest student debt in the U.S.
|States with the Highest Student Debt||States with the Lowest Student Debt|
|State||Student Loan Debt||State||Student Loan Debt|
U.S Student Debt Crisis
The increase in average debt and decline in average wage value has made many college graduates unable to repay their loans. Accrued interest on student loans continues to increase, making it very difficult to repay these loans. Failure to make a repayment on student loan hurts credit score and also makes it challenging to access debt relief.
What is the Student Debt Crisis?
The student debt crisis is a situation whereby student borrowers go into crisis due to an increase in average debt while the average wage continues to decline. Accrued interest continues to rise, making it very difficult to repay the loan. This makes many student borrowers unable to repay their student loans.
Some of the causes of the student debt crisis include high costs of tuition, decreased state funding, institution offering for-profit education and increased federal loan availability. Also, the problem with wage stagnation accelerates the student debt crisis.
The student debt crisis has effects on the economy. Some of these effects include lowering consumer spending and reducing business growth. Consequently, the economy also shrinks when students cannot repay student loans.
Summary of Average Student Loan Debt in U.S
The high cost of tuition fee and decreased state funding for student loans has led to the sudden increase in average student loan debt to $1.76 trillion. The average student loan debt in a public university is $30,030. This has created a student debt crisis since most students cannot repay their student loans due to accrued interest rates. However, the student debt moratorium introduced by the U.S government will help ease the situation.