The combination of high debt levels, economic challenges, and a lack of understanding of repayment options contributes to the difficulty and expense of student loan repayment. Addressing these issues requires a multifaceted approach, including better financial education, policy reforms, and support for borrowers.
Both federal and private student loans fall off your credit report about seven years after your last payment or date of default. You default after nine months of nonpayment for federal student loans, and you're not in deferment or forbearance.
As of March 2020, 45% of the outstanding federal education loan debt was held by the 10% of borrowers owing $80,000 or more. Student loan debt is the second largest debt, aside from a mortgage, in a household. 83% of borrowers have a loan balance of $50,000 or less.
What is considered a lot of student loan debt? A lot of student loan debt is more than you can afford to repay after graduation. For many, this means having more than $70,000 – $100,000 in total student debt.
Meanwhile, 1 million people had a federal student loan balance of more than $200,000, up from 600,000 individuals.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
Adults with a postgraduate degree are especially likely to have a large amount of student loan debt. About a quarter of these advanced degree holders who borrowed (26%) owed $100,000 or more in 2023, compared with 9% of all borrowers. Overall, only 1% of all U.S. adults owed at least $100,000.
At what age do student loans get written off? There is no specific age when students get their loans written off in the United States, but federal undergraduate loans are forgiven after 20 years, and federal graduate school loans are forgiven after 25 years.
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., at least 10 years of payments. To benefit from PSLF, you need to repay your federal student loans under an IDR plan.
If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the national credit bureaus, which can negatively impact your credit rating. If you continue to be delinquent, you risk your loan going into default.
Getting ahead of your student loan debt is generally a smart move. But, if it meansavoiding higher-interest debt or delaying an important financial goal, paying your student loans off ahead of schedule may not be worth it in the long run.
Roughly 42.7 million Americans have outstanding federal student loan debt — that's about 12.5% of the U.S. population, per census data.
Student debt will not be worth it in every situation. Borrowing a large sum and entering a low-paying career will either not pay off financially or take a painfully long time to do so.
Higher education financing allows many Americans from lower- and middle-income backgrounds to invest in education. However, over the past 30 years, college tuition prices have increased faster than median incomes, leaving many Americans with large amounts of student debt that they struggle or are unable to, pay off.
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.
Stick to the standard repayment plan
It splits up your total debt (plus interest) into 120 monthly installments spread over 10 years. The federal government also offers income-driven repayment (IDR) plans, which can lower your monthly payment based on your income.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
Student loan debt
Young people are more likely to have student loan balances: 24.3% of millennials and 20.2% of Gen Z are in student debt, compared to 14.9% of Gen X, 6.1% of boomers and only 1.4% of the silent generation.
U.S. consumers carry $6,501 in credit card debt on average, according to Experian data, but if your balance is much higher—say, $20,000 or beyond—you may feel hopeless. Paying off a high credit card balance can be a daunting task, but it is possible.
You're not alone if you are still paying off your student loans from your college education years ago. In fact, many Americans are paying their student loans well into middle age. A 2019 study from New York Life found that the average age when people finally pay off their student loans for good is 45.
According to Experian, average total consumer household debt in 2023 is $104,215. That's up 11% from 2020, when average total consumer debt was $92,727.
Debt could improve your life
The truth is that debt is often a necessary part of our personal finance picture. Few of us could buy our first homes without mortgages. We may also borrow to purchase cars, get necessary medical care, get married, or take bucket-list trips. Debt sometimes helps us make more money.