Student loan debt has become a major problem in the United States.
It is estimated that the country's total amount of student loan debt is over $1.6 trillion, with the average individual owing more than $35,000. This staggering amount of debt has caused many to fall behind on payments and even default on their loans.
Only 60% of the individuals with student debt have a degree, leaving 40% to have student loan debt with no degree to show for it. Of the individuals who have student loans and work in a public service job, 2 out of every 100 are having their loans forgiven while the rest are being rejected.
While the issue of student loan debt is often discussed, some facts about it may surprise you.
Here are the top three facts you never knew about student loan debt.
The total amount of student loan debt in the United States is estimated to be over $1.6 trillion.
That is an incredibly large amount of money that is owed to student loan providers. On average, each person who still owes their student loans has a total amount of $35,000, which is about $267 toward their monthly payments.
This amount of debt can be staggering for an individual, and many have a difficult time paying it back.
While these numbers are floated around on the news, what may be surprising is to know that just a decade ago, this number was $695 billion.
The largest consumer debt is student loans, which impacts most households in the US. Compounding interest on student loans can make paying back loans challenging.
While the average amount of debt each person has is $35,000, this number actually varies slightly for different generations. Gen Z has the lowest balances at $12,500. Baby boomers have a little less than $35,000. Gen X has the most student loan debt, with $40,000.
The Public Service Loan Forgiveness program was created to provide debt relief to individuals who work in public service jobs, such as teachers and librarians. This is a valuable program for these workers because of the historically low salary these individuals make compared to non-Public service workers.
However, the program is incredibly restrictive, and it is estimated that 98% of applicants are rejected. To be considered for the Public Service Loan Forgiveness program, a person needs to work in public service for ten years and make 120 qualified payments on their loans.
Any changes to your loans, from refinancing to payment type to late payments, can easily disqualify a person from the program.
Many individuals stay at their public service jobs for ten years to meet the qualifications to later find out that even though they were making payments on their loan, they are disqualified.
Many people believe that student loan debt is only an issue for those who complete college and obtain a degree.
However, the reality is that 40% of student loan borrowers are college dropouts who do not have a degree. If you take out student loans and don't graduate, you still have these loans to pay back.
This means that many people are taking on student loan debt, but they are not getting the financial benefits of a college degree.
The biggest issue around this fact is that these borrowers may have an average monthly student loan payment of $267. This monthly amount could even be as high as $567, depending on how much someone owes.
While income-driven payments are set in place to help lower-income borrowers pay off their loans, individuals with student loans but no degree are typically not earning a high salary. It can be challenging to pay off loans for something you never completed and cannot afford.
Student loan debt is a major problem in the United States.
It has been a topic of discussion for many years and even more so since the start of the COVID-19 pandemic. As a result, many borrowers have not had to make monthly payments on their loans, and interest has not been accruing.
However, the student loan repayment will begin eventually, and people are focusing back on the surprising facts around the topic.
For example, the total amount people owe on student loans is at a record high, people who can get their loans forgiven are being rejected, and almost half of student loan borrowers never received their degree.
February 1, 2023
January 31, 2023
January 28, 2023