Average student loan debt has been on the rise in the last decade as families try to keep up with soaring college costs. Though recent college graduates who borrowed to pay for school took out, on average, $135 less in loans compared with the prior year, the average total student debt continues to teeter around $30,000, according to U.S. News data.
College graduates from the class of 2020 who took out student loans borrowed $29,927 on average, according to data reported to U.S. News in its annual survey. That's around $5,000 more than borrowers from the class of 2010 had to shoulder -- representing a 20% increase in the amount students borrow.
The average debt of graduates varies based on institution type, per U.S. News data. Those who graduated in 2020 from a ranked private college borrowed more on average, at $32,029, than public college graduates, who took out $26,627.
Meanwhile, a smaller percentage of students are borrowing money to pay for college. In 2010, about 68% of college graduates took on student loan debt, while in 2020, 64% of graduates borrowed student loans.
The average total student loan debt, which includes both federal and private loans, jumped more than $1,000 in two of the earlier years of the last decade, but more recent years have seen a stabilization in the amount borrowed.
Yet, the average total debt remains close to the maximum amount a student can borrow if relying solely on federal loans, which is $31,000 in subsidized and unsubsidized direct loans, as set by the U.S. Department of Education for most undergraduates.
Student loan borrowing is often tied to the cost of college tuition and fees, which, per U.S. News data for the last 20 years, has more than doubled across ranked private and public National Universities -- schools that are often research-oriented and offer bachelor's, master's and doctoral degrees.
That rise in tuition and fees continued for the 2021-2022 academic year, with both private and public National Universities increasing their rates by about 2% to 3%.
Similar to businesses that faced coronavirus-related revenue losses, colleges and universities "had no choice" but to raise tuition fees to stay afloat, says Stacey MacPhetres, senior director of education finance at Bright Horizons College Coach.
"Realistically, particularly at tuition-driven schools, they have to raise tuition to keep up with their own costs," she adds. "It makes the student debt crisis a greater endeavor but I'm not surprised that we are seeing tuition rising. We have seen some schools freeze tuition or go with a standard four-year tuition rate that will sort of stabilize. But by and large, particularly this year, we are seeing more increases."
Student loans are already a significant burden for many Americans -- especially given layoffs and pay cuts amid the COVID-19 pandemic. National student loan debt topped $1.7 trillion in the second quarter of 2021, per Federal Reserve estimates.
And there's a severe racial disparity within student loan default rates: A 2019 federal study, for example, found that six years after students enrolled in college in 2011-2012, 13% of white borrowers in repayment were in default, while default rates were 20% for Hispanic borrowers and 32% for Black borrowers in repayment.
However, given the financial challenges generated by COVID-19, the federal government has provided relief to many 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 several extensions, student loan payments are expected to resume after Jan. 31, 2022.
In the meantime, borrowers can consider making payments to reduce the principal balance and save money over time, says Heather Jarvis, an attorney specializing in student loans. But for federal student loan borrowers who lost wages, she recommends enrolling in an income-driven repayment plan -- which sets monthly payments based on income and family size -- rather than requesting a temporary pause known as forbearance, which accumulates interest over time, after the payment freeze lifts early next year.
"I think many borrowers have benefited from the ability to use their available cash for other necessities rather than for student loan payments," Jarvis says. "Perhaps an even greater impact has been the suspension of interest because student loan borrowers can sometimes be shocked to see how the passage of time increases the cost of borrowing."
Though the federal student loan payment pause is beneficial, MacPhetres has concerns about the complications of adjusting budgets to restart repayment. "Hopefully with the job market freeing up quite a bit, folks going into repayment in January will see a clearer path," she says.
Some borrowers are also receiving assistance from their college or university. Using federal emergency funding from the CARES Act and the American Rescue Plan Act of 2021, a few institutions are paying off student debt owed directly to the schools. Spelman College, a historically Black school in Atlanta, for example, announced this summer that it had eliminated outstanding student balances from the 2020-2021 academic year.
As prospective and returning college students weigh whether to borrow for school, they should also keep in mind that average debt figures only tell part of the story.
"The total individual debt number doesn't really get to the heart of what people are experiencing," says Cody Hounanian, executive director of the nonprofit Student Debt Crisis Center. "We hear from borrowers every day who cannot afford their student loan payments, who cannot put food on the table. The average individual debt is usually somewhere in the $30,000 range, but when you look at the most distressed student loan borrowers who are in default, they are often in the single digits, less than $10,000."
The data above is correct as of Sept. 14, 2021. For complete cost data, full rankings and much more, access the U.S. News College Compass.
Emma Kerr is the personal finance editor at U.S. News. Previously, her reporting focused on education finance topics including college financial aid, student loan debt and employment. In her current role as personal finance editor, Kerr reports and writes about taxes, family finance, banking, credit, debt, spending and other topics related to financial health and smart money management. She also oversees the Your Money Decisions newsletter, delivered to inboxes twice weekly.
Kerr's work has appeared in the Frederick News-Post, the Chronicle of Higher Education and the Daily Beast, among others. She graduated from the University of Michigan with a degree in English Language and Literature and Middle East Studies. She also served as the managing news editor of The Michigan Daily. Kerr has been featured in numerous television, radio and print interviews as a personal finance expert. Follow her on Twitter and connect with her on her website, on LinkedIn or via email at firstname.lastname@example.org.