According to the United States Federal Reserve, outstanding student loan debt has reached an all-time high of $1.52 trillion—up in the last ten years from $619 billion—an increase of over 145%. The new number surpasses all auto and credit card debts held by Americans and sees no signs of slowing.
A few reasons for increased student debt rates:
- Slower repayment when compared to credit card and car loans
- Constant cycle of new borrowers
- Stagnant wages
- Federal and State funding decreases causing higher tuition rates/fees
Currently, over half of student loan borrowers leaving school owe at least $20,000. That’s double, up from 25 percent in the last decade. The Consumer Financial Protection Bureau released a study that analyzed borrowers who began repaying loans from 2002 to 2014 and looked at their repayment status through 2016. The data suggests that:
- At least 40 percent of borrowers owe over $30,000.
- Thirty percent of student loan borrowers are behind their loan balances after five years in repayment.
- 50 percent of student loan borrowers are over 34 when they start repaying their loans.
- 60 percent of those who cannot reduce their balances are delinquent.
The CFPB’s report also indicated growth in awareness among private companies who offer incentives to employees with student debt. Employers are increasingly helping their employees who borrowed by offering repayment assistance and other programs designed to help those in debt. Additionally, programs like the Public Service Loan Forgiveness plan allow borrowers employed in government and non-profit sectors to cancel debts after 10 years of non-delinquent payments. However, with student debts increasingly exceeding incomes, it’s a wonder if many repayments are even feasible.