Average student loan debt has been on the rise as families try to keep up with soaring college costs. Though 2023 college graduates who borrowed to pay for school took out, on average, $43 less in loans compared with the prior year, the average total student debt continues to hover above $29,000, according to U.S. News data.
Data reported to U.S. News by 991 colleges in an annual survey showed that graduates from the class of 2023 who took out student loans en route to a bachelor’s degree borrowed $29,374 on average. That’s $1,714 more than borrowers from the class of 2013 had to shoulder, representing a roughly 6% increase in the amount students borrowed over that decade.
The average debt of graduates varies based on institution type, per U.S. News data. Those who graduated in 2023 from a ranked private college borrowed more on average, at $32,062, than public college graduates, who took out $25,283.
However, a smaller percentage of students are borrowing money to pay for college. In 2009, about 68% of college graduates had taken on student loan debt, while in 2023, 59% of graduates had borrowed, per data reported to U.S. News.
The average total student loan debt, which includes both federal and private loans, jumped more than $8,700 from 2008 to 2017, but in recent years the average amount borrowed has stabilized.
“Unfortunately, we ask students — very young people — to make high stakes economic decisions,” says Catherine Brown, senior director of policy and advocacy at the National College Attainment Network, a nonprofit aimed at closing equity gaps in higher education. “And it’s critically important that they get informed and they look at the data and they think hard about what they can take on and what they’re looking for in their lives and their careers.”
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Factors That Lead to Student Loan Borrowing
Borrowing is often tied to the cost of college tuition and fees, which, per U.S. News data, has more than doubled over the last 20 years across ranked private and public National Universities — schools that are often research-oriented and offer bachelor’s, master’s and doctoral degrees.
There’s been a dramatic divestment in higher education by state legislatures, says Becky Pringle, president of the National Education Association, the largest teachers’ union in the U.S. “In the 1970s, state and local governments funded the bulk of core educational expenses in colleges and universities, but state funding cuts have shifted that financial burden to students and their families, thus leading to increased rates of lending.”
According to a 2022 NEA report, 32 states spent less on public institutions in 2020 than in 2008, with an average decrease of $1,462 per full-time-equivalent student.
“That’s not the whole problem,” Pringle wrote in an email. “Institutions spend more on things unrelated to student learning, such as institutional debt. As a result of these changing dynamics, students need to pay — and subsequently borrow — more.”
The rise in tuition and fees continued for the 2024-2025 academic year, with private National Universities increasing those costs on average by 4.2% from the previous year. In-state tuition at public National Universities increased by 4.4%, compared with a hike of 3% from the prior year for public university out-of-staters.
When adjusted for inflation, in-state tuition at public National Universities decreased by about 0.4% between 2023-2024 and 2024-2025. Out-of-state and private tuition and fees, on the other hand, still increased, but by 1.2% and 0.9% over the last year, respectively.
“It’s not just the tuition bill that matters, but all these nontuition expenses,” like housing, dining, transportation, books and supplies, says Nicholas Hillman, a professor in the School of Education at the University of Wisconsin–Madison. “And students can borrow for either tuition or nontuition expenses.”
Financial aid can help cover these expenses. But families are often left with a gap between financial aid received and the remaining cost of college. For instance, the average affordability gap at public bachelor-granting institutions in 2021-2022 was $1,690, according to recent data from NCAN. The affordability gap was much lower — $287 — at community colleges.
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How Does Student Loan Debt Affect Borrowers?
Student loans are a burden for many Americans, especially when inflation rises significantly or during an economic recession. National student loan debt was $1.59 trillion in the second quarter of 2024, although it declined by $10 billion from last quarter, according to a quarterly report by the Federal Reserve Bank of New York issued in August 2024.
This debt often has a major impact on the quality of life for those who take out loans to pay for college, especially for borrowers who go into default, experts say. Defaulting technically occurs after more than 270 days of overdue payment, leading to potential legal implications and lost eligibility for further federal student aid.
“Loan defaulting is highly problematic,” Brown says. “Students who don’t get a degree are much higher risk for defaulting on their loans than those who do. Once you’ve defaulted on a loan, it gets reported to credit bureaus, damages your credit rating and makes it harder to buy a house, a car or to reenroll in college. It can have a very long-standing impact on students’ economic lives.”
In the wake of financial challenges caused by the COVID-19 pandemic, the federal government provided temporary relief to many federal student loan borrowers. In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, which suspended most federal student loan payments, waived interest and halted collections on defaulted loans through September 2020. After multiple extensions, repayment resumed in October 2023.
To assist with initial repayment, the U.S. Department of Education announced a temporary “on-ramp” program for eligible borrowers. From Oct. 1, 2023 to Sept. 30, 2024, borrowers who missed monthly payments were not placed in default, reported as delinquents or referred to debt collection agencies.
According to a U.S. News survey — which received responses from 1,200 former college students with outstanding federal student loan debt between Sept. 30 and Oct. 4 — 63% have faced financial hardship due to the resumption of student loan payments, and half have missed a payment or fallen behind on other bills.
“There are a lot of benefits associated with federal student loans, including forbearance, income-driven repayment options, public service loan forgiveness,” Brown says. “If you are in repayment but struggling to make ends meet, our advice would be to reach out to your loan servicer to discuss your options. There may be a lower cost repayment plan that is affordable. The worst thing that a student can do is ignore the problem, because it will only fester and damage their economic future more as time goes on.”
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What to Consider Before Taking Out a Student Loan
As prospective students start thinking about college, cost should not be the only factor. “It has to be balanced with the institution they’re choosing, the career that they’re going into and the likelihood of success,” says Terah Crews, CEO of ReUp Education, which supports learners who have some college but no credential.
“Nobody goes to college planning to stop out,” she says. “But the truth is, 40% do. So look at your college’s graduation rate. … Say, ‘Am I better to take out actually a little more debt and work a little less, but go to a place where I’m going to have a very high likelihood of graduating and they’re going to help me make sure I’ll get to the end? Or am I going to take out less and essentially put myself in more risk of stopping out? In which case, I’m going to have debt and no pathway.'”
Some people refer to loans as “borrowing from your future self,” says Hillman, who is also director of the Student Success Through Applied Research Lab at UW–Madison.
“When our education system works well, there’s a positive economic return to that degree,” he says. “So if students graduate from college (and) earn that credential, over their lifetime, they will earn more on average — and that’s across gender and racial groups. But it doesn’t mean it always happens. So I think there’s an element of risk involved, but there is really strong evidence that college pays off in the long run. So knowing your own personal cost-benefit ratio is really the best way to think about whether or not and how much to borrow.”
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
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How Much Student Loan Debt Does the Average College Graduate Have? originally appeared on usnews.com
Update 10/21/24: This article was published at an earlier date and has been updated with new information.
