Infographic: Student Loan Debt – Is It Really A Crisis?

There has been a lot of talk about student loan debt in the news over the past couple years. The prevailing wisdom is that this debt, which students had to incur to pursue an education for a better life, is burdening the young generation and preventing them from succeeding. Recently, President Joe Biden has expressed support for canceling $10,000 of student loan debt for each student, and some Democratic leaders want him to cancel $50,000. This is aggravating to many people who have already paid off their debt as they view student loan debt cancelation as a handout to irresponsible borrowers.

For many of us, it’s hard to grasp the true extent of student loan debt in America. We mostly only have knowledge of our own debt or those of our friends and family, and news stories about people with student loan debt tend to focus on those with extreme levels of debt, generally six figures. But to get a good sense of the real situation, we have to look beyond anecdotes to see the actual data. This infographic should help.

How Many Students Incur Debt?

As you can see above, the percentage of students who incur debt for their education has generally been increasing for each successive generation. I arranged the x-axis from oldest to youngest so you can see how the percentage of students with debt has changed over time. While only 29% of those 60+ incurred debt for a Bachelor’s degree, this has more than doubled to 62% for people 18-29. That said, the percentage of students who incurred debt for an associate degree has actually decreased recently. More 30-44-year-olds took out debt for an associate degree than 18-29-year-olds. The percentage has also plateaued for students of these age groups completing a graduate degree.

Who Incurs The Debt?

Most debt is taken out by the students themselves. You’ll notice that the percentage is different from the previous graph. This is because we are looking at the percent of adults who incur debt for their education rather than the percent of students. A small percentage of spouses/partners also take out debt for their significant others (4%), as do parents or grandparents for their children/grandchildren (5%).

How Much Do Students Borrow?

Most students (56%) borrow less than $20,000 for their education, and accordingly, the median debt was $17,000 as of 2020. The average debt was higher at $32,731, skewed by the extremely high debt values of a small number of borrowers. Interestingly, even though we often hear about people with six figure debt in the news, these students account for only 6% of all borrowers of student loans. More than 3/4 of borrowers incur less than $40,000 in debt.

What Types Of Schools Burden Students With The Most Debt?

Unsurprisingly, fewer students take out loans for public colleges (40%) than for private colleges (56%). Private for-profit schools are the worst, with 64% of students taking out loans to attend.

Student Loan Payment Status

Out of all U.S. adults, only 31% have incurred debt to pursue education. 30% did not attend college at all, and of those who did, 57% did not take out loans. Only 3% of all adults are actually behind on loan payments. That is 4% of those who attended college or 9% of those who took out loans. Almost half (47%) of those who took out loans have already paid them off, and 44% are keeping up with loan payments.

What Size Loans Are Most Defaulted On?

While you might think that the largest student loans are most frequently defaulted on, this is not actually the case. Most people who default on their loans owe less than $5,000. A full 2/3 of people who default owe less than $10,000. 84% of those who default owe less than $20,000. Only 4% of people who default owe more than $40,000.

How Expensive Are Loans For Graduate Schools?

People with the highest debt levels tend to be those who have attended graduate school programs. This can help to explain why people with larger student loans tend to default less frequently since they usually end up with higher-paying jobs. People who attend Master’s programs on average incur debt of $66,000, and those who attend law school take out an average of $130,900. Students attending healthcare-related programs tend to take out the most debt, with an average of $163,494 for pharmacy school, $196,520 for medical school, and $287,331 for dental school.