If you went to college in the last three decades or so, chances are that you might still be paying back your student loans. The good news, if there is any to be found, is that you are not alone. As of the beginning of this year, more than 44 million Americans hold substantial debt as a result of pursuing a college degree. This is a staggering number by any metric and the statistics attached to those borrowers are no less egregious.
What is the average student loan debt in 2020?
According to the Federal Reserve, there are at least 44.7 million borrowers with accumulated student loan debt in the United States. That debt amounts to approximately $1.54 trillion dollars. According to the Department of Education, the average student loan debt in 2020 is $35,397. This is a fairly large jump from the $32,600 they owed on average in 2019, which was a further 2 percent more than it had been the year prior.
The amount owed varies considerably among borrowers. This $35,397 may be an average, but a quarter of borrowers with outstanding debt were reported owing up to $7,000 or less, with another quarter owing $43,000 or more. The differences can be attributed to several factors. One of which refers to the fact that loans taken out for state-run schools tend to be less than those for private institutions.
The average monthly payment for people making student loan payments is somewhere between $200 and $299. Unfortunately, 10.8 percent of those borrowers are delinquent or in default in excess of 90+ days. What does this all mean? Well, it means the United States has something of a student loan crisis on its hands.
Many borrowers default on their student loan debt.
Repayment of those loans has traditionally been slow for a number of reasons. Millions are defaulting on their student debt as many who do attempt to repay, fail to make any progress at all. Apparently only about 36 percent of borrowers who were still current on their loans managed to reduce their balance over the past year.
A recent report by JPMorgan Chase indicated that out of all types of household debt, student loan debt is the fastest-growing category in the country
Why so much interest?
The categorically high-interest rates attached to student debt are the main cause of the issue. Even those who stave off defaulting on the loan by making monthly payments, find themselves mired in the debt, even after years of so-called “repayment.”
Wary of debt
Americans are more informed than ever about the mounting debt crisis but that presents its own problems as well. Many families are wary of taking on any debt on behalf of their college-aged children because they understand the reality of it. The impossible interest rates and rising college costs means that they will not be able to repay those loans for years or decades to come.
A student loan silver lining
Thankfully, there is some good news in all of this. Current rates for federal loans are lower than they have been in years and many of those loans have protections in place to help borrowers keep on track; even in the event of financial hardship. The trick is to understand what options are available and plan ahead before taking on any new student debt.