Student Loan Statistics

Who holds student loan debt?

Demographics of loan holders

Surprisingly, it’s not only those in younger age groups that struggle with debt.

• Only 37.5% of people with student debt are below the age of 30. The other 62.5% are older than 30.

Unsurprisingly, minorities are affected significantly by student debt.

• 77% of African American students took out a federal loan to pay for higher education compared to the 60% national average for all students.
• The average debt upon graduation is also higher for African American students. For example, In 2012, their average debt was $29,344 compared to the national median of $25,640.
• Troubles don’t end after successfully securing a job after graduation: of the total number of workers with a bachelor’s degree, African American households earn an income of 23% less than the median for the overall population.
• Examining students that began college in 2003: 50% of black students have ceased student loan repayment and gone into student loan default on their loans within 12 years due to financial insecurity (compared to a 36% default rate for Hispanic students and 21% for white students).

The problem of debt is especially acute for women.

• While women account for 66% of undergraduates nationwide, they are saddled with almost two-thirds of all student debt.
• Not only are women more likely to take on debt, but their median debt is also 9.6% more than men.
• Females do also take a longer period to repay their debt, resulting in more overall interest. This is partially due to the gender pay gap – women earn 83 cents for every $1 that men earn as of 2021.

How are student loans repaid?

Slowly… or in many cases, not at all. A sizable chunk of student loans are in limbo – or totally abandoned.

• 2.9 million borrowers are currently deferring their federal student loans. In this instance, deferment means that interest doesn’t accrue.
• 24.8 million borrowers currently have federal student loans in forbearance. Interest is still piling up for them.
• An astounding 5 million borrowers have their federal student loans in default. That means that 10% of all people with student loans haven’t made student loan payments on their debt in more than 9 months.
• • Students that left college before completing their degree are more than twice as likely to eventually default on their loans compared to students that graduated.
  • More than half of all defaulted debts are on loans that amount to less than $10,000.

Types of repayment plans

Fortunately, there’s a multitude of methods to repay student debt that’s conscious of the burden it imposes on graduates. Only a small fraction of all borrowers are on such a plan, however, 6.73 million federal loan borrowers are on an income-driven repayment plan.

Broken down by type of plan. These statistics are accurate as of April 2022 and soon to be updated:

• 2.8 million federal loan borrowers are on an income-based repayment plan. On this plan, payment is capped at 10% of total income, and payment is made for 20 years.
• 0.8 million federal loan borrowers are on an income-contingent repayment plan. On this plan, the borrower pays the lesser of 20% of discretionary income (with a 25-year term) or the equivalent of a 12-year fixed plan.
• 1.5 million federal loan borrowers are on the Pay As You Earn plan. On this plan, payment is 10% of total income for a 20-year term, but it can never exceed the estimated payment of a standard repayment plan.
• 3.3 million federal loan borrowers are on the Revised Pay As You Earn plan. On this plan, payment is capped at 10% of discretionary income, and undergraduate loan terms are extended to 20 years (grad loan terms are extended to 25 years).

The advantage of these federal repayment plans is that if the balance is not entirely paid by the end of the term, the remaining debt is forgiven.

The disadvantage is obvious: the standard federal student loan has a repayment term of 10 years. Doubling that exponentially increases the amount of interest owed and the lifetime cost of the debt.

Loan forgiveness statistics

There are two primary federal student loan forgiveness programs offered by the U.S. Department of Education.

Public Service Loan Forgiveness

You should know the following about the PSLF program:

• The PSLF program requires that you work for a qualifying employer and not necessarily a public school considered low-income in order to receive loan forgiveness. This means that you can choose to work for various government organizations at any level, be it tribal, local, state, federal, or the U.S. This also includes organizations classified as not-for-profit. They should also be tax-exempt under section 501(C)(3) of the internal revenue code. You may also work for various other not-for-profit organizations, provided they are involved in qualifying or specific types of public services.
• However, less than 15,000 students have received loan forgiveness through the PSLF or Public Service Loan Forgiveness program. In fact, only 2 in every 100 PSLF applications qualify for student loan forgiveness.
• Additionally, the loan amounts given under the PSLF program are not considered taxable by the Internal Revenue Service.
• This program forgives the remaining balance on your federal direct loans after 120 consistent or qualifying payments, which is an estimated ten years.
• However, in order for your payments to count towards the 120 installments needed for forgiveness, you’ll need to meet specific requirements.
• In order to get the ultimate value out of the program, it is suggested that you repay your loans on a repayment plan that is income-driven.
• Income-driven repayment plans are available from various sources, including Studentaid.gov.
• In order to qualify for the forgiveness loan, you need to have direct loans. Other types of federal loans, such as Perkins loans and FFEL do not qualify unless you consolidate them. To check the type of loan you have, feel free to log into Studentaid.gov.

Teacher Loan Forgiveness Program

Teachers that teach 5 consecutive years in a qualified low-income school can be forgiven between $5,000 and $17,500 of their debt. About 27,000 teachers received aid from this program in 2017.

What you should know about the Teacher Loan Forgiveness program:

• Eligible teachers may qualify for up to $5000, while specific, highly qualified secondary mathematics, special education, or science teachers may qualify for up to $17,500 in forgiveness.
• To apply and qualify, you need to be employed or hired at an eligible school as a full-time teacher for a period of five consecutive and complete years. A minimum of one of those years should be after the 1997 – 1998 academic year.
• If you spent time receiving benefits through AmeriCorps while teaching, it doesn’t count toward the five-year required teaching time for TLF.
• Perkins loans and Plus loans are not eligible for this program.
• You may apply for the Teacher Loan Forgiveness for parents in order to maximize your forgiveness amount, and this means that you won’t have to make loan payments every month. However, interest will still accumulate. If you have an overall loan amount that is more than the Teacher Loan Forgiveness program amount that would like to receive, i.e., either $5000 or $17,500, then you won’t qualify for this type of forbearance.
• You need to complete the five-year teaching requirement before you can apply for TLF.

Perkins Loan Cancellation for Teachers

The Perkins Loan Cancellation for Teachers program forgives up to 100% of the federal Perkins loan. However, you need to be a full-time teacher at a school considered low-income, or you need to teach specific subjects.

Here’s what you need to know about the Perkins Loan Cancellation for Teachers program:

• Suppose you have Perkins loans, then this program is designed to forgive your Federal Perkins loans.
• Up to a hundred percent of the loan could be canceled for service as a teacher in the following increments:

1. 15% cancellation per year (first and second) years of service
2. 20% cancellation (third and fourth) years
3. 30% cancellation for the first year

• Please note that every amount canceled annually is inclusive of the interest accrued for that specific year.
• Check the studentaid.gov database online for the number of years you’ve been working as a teacher to find out if the school is classified as a low-income school.
• You may qualify if you teach science, mathematics, foreign languages, special education, and bilingual education, even if you don’t teach at a school considered low-income. If you teach a different subject decided by the relevant state education agency or have a shortage of qualified teachers in the relevant state, you may also qualify.
• If the school is a private school and has confirmed its non-profit status with the IRS, then private school teachers may also qualify for this program. Additionally, you may also be eligible if the school is offering secondary or elementary education as per state law.