Students are generally borrowing more because college tuition has grown many times faster than income. The cost of college—and resulting debt—is higher in the United States than in almost all other wealthy countries, where higher education is often free or heavily subsidized.
Student loans aren't the only kind of university debt. Colleges and universities have borrowed billions, mostly to build new dorms, dining halls and facilities - space they may, or may not, need as student enrollment declines nationally. Today, nearly 10 cents of every dollar in university budgets help pay intere.
One major reason for the significant rise in student debt is that more Americans are borrowing to attend college. The percentage of households with student debt has more than doubled, from 10 percent in 1992 to 21 percent in 2022.
More than 90% of outstanding student debt in America is federal debt. But there are students and parents who turn to private student loans every year to fill in the gaps left after federal financial aid is tapped. During the 2022-2023 school year, families borrowed more than $10 billion in private loans.
Among student borrowers, women take out an average of $31,276, while men borrow an average of $29,270, according to a 2021 data analysis by the American Association of University Women. Black women owe a disproportionate amount of student debt.
Increased Tuition & Fees
The Middle Income Student Assistance Act (MISAA) of 1978 made federal student loans more available. As more aspiring students gained access to funding, academic institutions began to charge higher tuition and fees.
Low-income, first-generation college students, independent students, and borrowers who are Black, Hispanic or Native American are more likely to borrow larger amounts and face greater difficulty repaying their loans. Female graduates are also more likely to have student loan debt and typically earn less after ...
After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers.
Your interest charges will be added to the amount you owe, causing your loan to grow over time. This can occur if you are in a deferment for an unsubsidized loan or if you have an income-based repayment (IBR) plan and your payments are not large enough to cover the monthly accruing interest.
Campus downsizing – increased competition from private colleges is adding even more pressure. Mergers – in some extreme cases, some colleges are actually merging with others to pool resources and reduce administrative costs. This trend is leading to even more closures being predicted.
Today's student debt problem can be traced to the 1960s, when California Gov. Ronald Reagan cut higher education funding and raised tuition. Once considered a public good, higher education became seen nationwide as a private commodity.
The total average student loan debt (including private loan debt) may be as high as $40,681. The average federal student loan debt is $37,853 per borrower. Outstanding private student loan debt totals $128.8 billion. The average student borrows over $30,000 to pursue a bachelor's degree.
20% of U.S. adults report having paid off student loan debt. The 5-year annual average student loan debt growth rate is 15%. The average student loan debt growth rate outpaces rising tuition costs by 166.9%. In a single year, 31.5% of undergraduate students accepted federal loans.
General Information About Beginning Repayment
You need to begin repaying most federal student loans six months after you leave college or drop below half-time enrollment. PLUS loans enter repayment once your loan is fully disbursed (paid out).
Americans owe about $1.6 trillion in student loans as of June 2024 – 42% more than what they owed a decade earlier. The increase has come as greater shares of young U.S. adults go to college and as the cost of higher education increases.
Those who borrowed from Sallie Mae after this 2014 split have private student loans, which aren't eligible for federal forgiveness programs. However, Sallie Mae will discharge debts for borrowers who die or become totally and permanently disabled.
Sallie Mae is not a federal loan servicer.
When Sallie Mae first formed, it was a government-sponsored enterprise servicing federal student loans — or loans made by the government. But in 2014, it split into two separate companies.
After the separation, the company's loan servicing and collection operations were re- branded as Navient, and the consumer banking business continued under the Sallie Mae brand.
Soaring college costs and pressure to compete in the job marketplace are big factors for student loan debt. Student loans are the most common form of educational debt, followed by credit cards and other types of credit. Borrowers who don't complete their degrees are more likely to default.
The benefits of free college include greater educational access for underserved students, a healthier economy, and reduced loan debt. Drawbacks include higher taxes, possible overcrowding, and the threat of quality reduction.
They found that attending a for-profit college was the strongest predictor of student loan default — greater than college completion, major, college selectivity, or a student's income level.
College is a good investment
By 2021, the difference had grown to 62 percent (and closer to 90% for workers with graduate degrees). Currently, California workers with a bachelor's degree earn a median annual wage of $81,000.
Colleges started charging tuition fees in the 1960s due to increased demand for higher education, the formation of for-profit universities, and the establishment of student loan programs.