Student Loan Debt: 2020 Statistics and Outlook

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More than half of all American students now have to go into debt to get through college, and their average student loan debt topped $47,000 in 2020. Collectively, they owe nearly $1.6 trillion, according to the Federal Reserve.

As any recent college student—or parent of a student—knows, obtaining a degree requires a much bigger financial sacrifice today than it did a generation or two ago. Over the past three decades, the average cost to attend a public four-year institution has more than tripled, and it more than doubled at private four-year schools, according to The College Board.

For many Americans, footing the bill through savings and investments simply isn’t tenable. The upshot: More students and families are relying on loans to pursue higher education.

Key Takeaways

  • Soaring college costs and pressure to compete in the job marketplace are big factors in student loan debt.
  • More than half of American students now need to borrow to pay their way through college.
  • Borrowers who don’t complete their degrees are more likely to default.

Overall Average Student Debt

How big a role do student loans play at today’s colleges and universities? Here is a snapshot of borrowing in 2020:

Student Loans in 2020: A Snapshot
$1.68 trillion Amount of student loan debt outstanding in the United States
54% Percent of college attendees taking on debt, including student loans, to pay for their education
$37,584 Average amount of student loan debt per borrower
15% Percent of adults with a student loan
10.8% Amount of student debt that’s at least 90 days past due or in default

Source: Experian, Federal Reserve, EducationData.org

The total amount of outstanding student loans reached an all-time high in 2020, at $1.6 trillion, according to the Federal Reserve. Based on the current rate of growth, aggregate student loan debt could reach $2 trillion by 2024, according to the website SavingforCollege.com.

The soaring cost of college is certainly a big factor in that growing debt load. The average out-of-state tuition and fees at a four-year public university are now $25,396, according to EducationData.org. Private colleges are even pricier, with an average published cost of $53,102 for tuition and fees.

Growth of Student Loan Debt (in trillions)
2020 $1.56
2019 $1.41
2018 $1.33
2017 $1.28
2016 $1.17
2015 $1.13
2014 $1.06

Source: Experian

Average Loan Balances

Roughly 43% of Americans who went to college took on some form of debt in order to do so, according to the Federal Reserve. But that number is even higher for today’s students, about 54% of whom need to borrow to cover their educational costs.

Student loans are by far the most common borrowing options (93% of those who hold education debt have student loans). However, 31% of people used other forms of borrowing, including credit cards (24%), home equity lines of credit (7%), and other types of credit (12%).

Most but by not means all of this debt is carried by younger adults. Borrowers between the ages of 25 and 34 carried roughly $498 billion in federal student loan debt as of the second quarter of 2019, according to the U.S. Department of Education. Adults ages 35-49 carried even more debt, with student loan balances totaling $558 billion. People who are 50-61, meanwhile, owe about $230 billion in student loans.

Uptick in Delinquencies

About two in 10 adults who took out student loans were behind on their payments, according to the latest figures available from the Federal Reserve. And a significant portion is in arrears. According to the Federal Reserve Bank of New York, 10.8% of total student loan debt was at least 90 days delinquent or in default.

Those numbers actually understate the problem because of emergency relief measures regarding student loan repayments that were put into effect in March 2020 as the coronavirus pandemic began. Those measures halted collections on defaulted student loans and suspended loan repayments. Later action extended the relief measures through at least Jan. 31, 2021.

About 27% of people who entered college in the 2003-2004 academic year have since defaulted, notes Judith Scott-Clayton of the Brookings Institution, using data from researcher Ben Miller. If that growth continues at the current pace, she concludes that roughly 38% of borrowers in that age bracket will default at some point by the year 2023.

People who get advanced degrees tend to accumulate more debt but are also likely to make payments on their student loans on time.

Borrowers who never completed a degree tend to have a harder time paying off their loans. Thirty-seven percent of people who took out student loans but never completed an associate or bachelor’s degree are behind on their payments.

While people with more advanced degrees tend to take on more debt, they’re more likely to make their student loan payments on time. Of the former college students with less than $10,000 of outstanding debt, 18% are delinquent. It goes up to 22% for those with debt loads between $10,000 and $24,999. However, only 16% of adults with $100,000 or more in loans are behind on payments.

Economic Impact of Debt Cancellation

The sheer size of student debt can be characterized as a weight on the U.S. economy as well as a burden on the millions of individuals who owe it.

About 92% of student loan debt is backed by the U.S. government. That fact has made it a political issue. Some Democratic candidates in the run-up to the 2019 presidential election suggested canceling some or all of student debt.

Jan. 31, 2021

The date when the emergency suspensions of student loan repayments and student loan default actions are due to expire.

No action has been taken, but at least one of those candidates, U.S. Senator Elizabeth Warren of Massachusetts, is still seeking action on the issue. In September 2020, she and Senate Minority Leader Chuck Schumer of New York introduced a resolution urging the next president to cancel up to $50,000 in federal student loan debt for each borrower.

They say that this could be done by a president’s executive order rather than through legislation.

Pros and Cons of Debt Cancellation

Moody’s Investor Service predicts wiping out student debt would yield a stimulus to economic activity that is comparable to tax cuts in the near term. Over the longer term, it could increase homeownership and boost the creation of small businesses.

Outright debt cancellation would boost real gross domestic product (GDP) by $86 billion to $108 billion per year, according to one study from Bard College’s Levy Economics Institute.

However, analysts warn of the risk of moral hazard and an accumulation of even higher student debt burdens.

Last year, the U.S. Department of Education collected $85 billion in principal, interest, and fees on federal loans.

If student debt is canceled and no measures to offset the loss in revenue are taken, Moody’s says that the fiscal deficit would widen to 6.7% of GDP by 2029, up from its current forecast of 6.3% of GDP.

Average Student Loan Debt FAQs

Here are some answers to commonly-asked questions about student loan debt in the U.S. and the U.K.

What Percentage of the U.S. Population Has Student Loan Debt?

About 14.4% of all American adults are saddled with student debt. That figure reflects the growing importance of a college degree to getting a good-paying job. It also reflects just how much college costs have increased: More than half of those who attend college, or their parents, have to take out loans to do it.

How Much Is the Average Student Loan Debt in the U.K.?

Students graduating from universities in England in 2020 will owe an average of 40,290 pounds in student loan debt, compared to just under 25,000 pounds for graduates of Welsh universities, 23,520 pounds for graduates in Northern Ireland, and $13,890 for graduates of Scottish universities. Those figures are vastly higher than they were in the year 2000 when indebtedness for graduates in all three countries was under 3,000 pounds.

How Do You Get Your Student Loans Forgiven?

The U.S. government will forgive, cancel, or discharge some or all of an individual’s student loan debt only under a number of specific circumstances. Teachers in low-income schools and public service employees may be eligible for forgiveness of a portion of their debt. People who are disabled may be eligible for discharge of the debt.

The Federal Student Aid office indicates that those who think they may qualify for loan forgiveness should contact the student loan servicer for their loans. That is the company that handles the loan payments.

As noted above, a federal COVID-19 emergency relief measure suspended student loan repayments from March 2020 until at least Jan. 31, 2021. Collections on payments that are in default also were halted. This is a suspension of repayment, not a cancelation or even a reduction of the debt.

The Bottom Line

Students who attend college are hoping to earn a degree that will dramatically increase their earning power after graduation. But for many adults, much of those earnings will have to go toward paying back student loans.

Currently, about 54% of students need to borrow in order to pay for tuition and fees. And among those who do, the average balance is a hefty $57,000. That’s a heavy burden to carry, even before someone has earned their first professional paycheck.

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