Student loan debt is breaking all sorts of records, and not in a good way.  Years ago, it surpassed credit card debt and exceeding the $1 trillion mark.  Today, student debt statistics show it at over $1.4 trillion in unpaid funds, and it’s second only to housing debt in the average household.

Not only does the figure continue to climb without any sign of slowing, but according to the Federal Reserve, it’s the only form of consumer debt that has shown continued growth after the Great Recession.

In this article, we will drill down deep into the data around the student debt crisis.  We’ll take an in-depth look at reasons for the increase, share some surprising facts, and give you information on how to pay back student loans after graduation.

Why are Student Loan Debt Statistics on the Rise?

Rising figures in student debt statistics can be contributed to several factors.  Although it is shocking to look at the growth figures, it’s important to note that about one-quarter of the increase in debt since 1989 is due to a greater number of people enrolling in college. It makes sense that more students would equate to more debt, but that’s only one-fourth of the story.

The remainder of the statistics on student debt shows that 68 percent of students graduate with an average of $30,100 in debt after they complete their schooling.  This rising figure is due to a combination of factors, but the increased cost of college tuition is chief among them.

As analysts continue to dig into the statistics on student debt, we learn more about the debt outcomes for individual borrowers.  Having a large balance doesn’t necessarily mean that you won’t be able to pay it back, but dropping out of the program gives you a much higher potential rate of loan default.

Here are a few more surprising student debt statistics.

4 College Student Debt Statistics 

In 2016, the Federal Reserve Board did a Survey of Household Economics and Decision-making.  Pew Research Center then conducted an analysis of their findings which brought forth some shocking information about student loans.  Here are four facts that you may not know.

Most Student Loan Debt is Carried by People Ages 18-29

While adults in every age bracket over 18 reported having some student loan debt, those between the ages of 18 and 29 were the most likely to carry a balance.  Four in ten adults in that age bracket have debt, and when you drill down further to those in that group who have a bachelor’s degree or more, 53% have a debt burden.

In older age groups, student debt is less common.  Around 22% of adults ages 30 to 44, and 4% of those ages 45 and older have student loan debt.  This is due to a combination of factors.  First, older adults have had more time to pay off debt and second, young adults are more likely now than in the past to take out student loans.

In the 1989 to 1990 school year, only around half of the college-aged students took out a loan.  Conversely, in the 2011 to 2012 school year, that percentage rose to two-thirds of the students according to the National Center for Education Statistics.

Student Debt Loan Amounts Vary Widely 

While it’s easy to pinpoint an average amount of student loan debt amongst borrowers, the amount owed by individuals varies from a few thousand to over a hundred thousand dollars.  The biggest contributing factor to these amounts is the degree attained.

In examining borrowers of all ages who have student loan debt, those with less than a bachelor’s degree self-reported a median of $10,000 owed.  People with a bachelor’s degree reported a median of $25,000, and those with a postgraduate degree have a median of $45,000 in debt.

Although six-figure balances are uncommon, they’re not unheard of.  Around 7% of current borrowers have $100,000 or more in debt, and that load belongs predominantly to postgraduate degree holders.

Student Loan Debt Can Cause Financial Struggles 

A college degree no longer equates to finding a good job that allows you to pay off debt easily.  I adults between the ages of 25 and 39 who have both outstanding student loans and a job, 21 percent of them work a second job to help pay off their debt.  Those in the same age group who don’t have any student loans are half as likely to hold multiple jobs.

In addition, student loan holders feel less financially secure and optimistic compared to those who don’t carry an outstanding burden.  Only 27 percent of college graduates who have loans say they are living comfortably, compared to 45 percent of their peers without loans.

Student Loan Debt Can Make a Degree Seem Less Valuable 

When surveyed about the value of their degree, only about half of the people ages 25 to 39 who have a bachelor’s degree or higher responded that their debt is worth the benefits of their education.  However, in those of the same age group and education level who don’t carry any financial debt for their education, seven in ten believe that the lifetime benefits outweigh the costs.

Student Loan Repayment Guide

Although leaving your post-secondary education debt-free is the best option if possible, for most students, student loans are needed to be able to afford their degree.  If you’re carrying debt, here are some things you need to know to start paying off the balance.

Repayment Plans

There are two different types of student loans: private student loans and federal student loans.

If you have private loans, you’ll need to check with your lender about your repayment options.  They will vary both in their term and payment plans.

For those with federal student loans, there are several different plans available to pay back your debt.  A few options include:

  • Standard Repayment: In this option, you’ll pay a fixed monthly amount for a period of 10 years to pay off your balance.  If you have a consolidation loan, you can take up to 30-years to pay it off.
  • Graduated Repayment: This plan allows new graduates to begin paying loans in small increments and then work your way up to larger payments.  You’ll begin with a set monthly payment that increases every two years over the course of the 10-year repayment term.
  • Extended Repayment:  This option allows you to pay either a standard or graduated amount monthly over a longer payment term.  Rather than being limited to 10 years, an extended repayment term can stretch as long as 25 years.  Although this option results in lower monthly payments due to the longer term, you’ll pay more interest over the life of the loan.
  • Income-Contingent Repayment (ICR):  This option allows your student loan payment to rise and fall with your income.  Based on a calculation of 20% of your discretionary income from your federal tax return, you have 20 or 25 years to pay off the loan.
  • Income-Based Repayment (IBR):   Here, your monthly payments are 10% or 15% of your discretionary income and are recalculated annually.  You have 25 years to pay off the loan.
  • Income-Sensitive Repayment: Another income-based option, here your annual income determines your monthly payment and you have 15 years to pay off the loan.
  • Pay as You Earn (PAYE):  With this repayment choice you’ll pay a maximum of 10% of your discretionary income and it will be recalculated every year.  You have 20 years to repay the loans in full.
  • Revised Pay as You Earn (REPAYE):  An alternative to the traditional PAYE system, here your monthly payments stay at 10% of your discretionary income calculated annually, but you have up to 25 years to repay the debt.

What if I Don’t Repay My Student Loans?

Just like with any other loan, if you neglect to make payments, there are consequences.  In the case of student loans, if you neglect them for more than 270 days your loan will go into default.  If you have a federal loan, the government can do one or more of the following things:

  • Automatically deduct the loan payments from your weekly, bi-weekly, or monthly paycheck.
  • Withhold any money you are eligible to receive in your federal and state tax refunds and instead apply it to the amount you owe.
  • Let the credit reporting agencies know that you have defaulted on your loan.  This will damage your credit score and can cause long-term issues when you try to obtain other loans like one for a home, car, or even a credit card.
  • Apply late fees to increase the amount you owe towards your loan.
  • Deny any further student aid if you want to go back to school or get an advanced degree.
  • Sue you for the outstanding balance.  In this instance, not only would you be liable for the loan, but also any attorney’s fees and court costs associated with the case.

It’s important to note; bankruptcy isn’t a good solution to get rid of your student loan debt.  While the process will give you a blank slate with most financial institutions, federal student loans are almost never included in bankruptcy settlements.  Take the time to figure out a payment plan that works for you and take extensions if needed to avoid any of these consequences of a loan default.

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