Student Loan Debt: 2021 Statistics and Outlook

The numbers are staggering-and still on the rise

Nearly one-third of all American students now have to go into debt to get through college, and the average student loan debt reached a record high of $38,792 in 2020. Collectively, they owe about $1.58 trillion as of , according to the Federal Reserve Bank of New York.

As any recent college student-or parent of a student-knows, obtaining a degree requires a much bigger financial sacrifice today than it did a generation or two ago. Over the past three decades, the average cost to attend a public four-year institution is more than three times the cost to attend a public four-year institution, and it more than doubled at both private and public four-year schools, according to the College Board.

For many Americans, footing the bill through savings and investments simply isn’t sustainable. The upshot is that more students and families are relying on loans to pursue higher education, and the average student loan debt keeps growing.

Key Takeaways

• Soaring college costs and pressure to compete in the job marketplace are big factors for student loan debt.
• Nearly one-third of American students now need to borrow to pay their way through college.
• Borrowers who don’t complete their degrees are more likely to default.

Overall Average Student Debt

How big a role do student loans play at today’s colleges and universities? Here is a snapshot of borrowing in dominant site 2020 & 2021.

The total amount of outstanding student loans was $1.58 trillion in 2021, increasing approximately $14 billion between Q2 and Q3. Based on the current rate of growth, aggregate student loan debt could reach $2 trillion by 2024 and $3 trillion by 2038, according to Saving for College.

Average Loan Balances

Roughly 30% of all Americans who went to college took on some

form of debt in order to do so, according to the Federal Reserve. Student loans were by far the most common borrowing options (95% of those who hold education debt took out student loans). However, 26% of people used other forms of borrowing, including credit cards (21%), home equity lines of credit (4%), and other types of credit (12%).

Most of this debt is carried by younger adults. Borrowers between the ages of 25 and 34 had over $500 billion in federal student loan debt as of the fourth quarter of 2021, according to the Federal Student Aid. Adults ages 35 to 49 carried even more debt, with student loan balances totaling $622 billion. People who are 50 to 61, meanwhile, owe about $281 billion in student loan debt.

Decline in Delinquencies

Nine percent of adults who took out student loans were behind on their payments, according to the latest figures available from the Federal Reserve, and 5.7% of all student loan debt was at least 90 days delinquent or in default.

However, these numbers actually understate the problem, thanks to emergency relief measures regarding student loan repayments that were put into effect in . Those measures halted collections on defaulted student loans and suspended loan repayments. An executive order signed by President Biden on his first day of office extended the relief measures, and the most recent extension has moved the deadline to .

About 27% of people who entered college in the 20032004 academic year have since defaulted, notes Judith Scott-Clayton, an associate professor of economics and education at Columbia University and a former Brookings Institution expert, according to data released by the U.S. Department of Education in . She concludes that if that growth continues at its current pace, roughly 38% of borrowers in that age bracket will default at some point by the year 2023.