More Americans are burdened with student debt and medical debt than ever before. These debts appear to be "necessary" debts in that many consumers don't feel they could have been avoided. They didn't have much choice but to pursue healthcare options during accidents or illness. College or university is part of the pursuit of the American dream, for those whose parents have degrees and for those who wish for a better life than their parents. These debts adversely affect the ability to pay other debts, including mortgage, utilities and credit card bills, and build savings or retirement, which leads to problems with credit scoring and debt collection.
Here is the latest information on student debt in America.
Student Debt 2017 Statistics
It has been widely reported that among 44 million Americans, there is more than $1.3 trillion in student loans. The website Student Loan Hero has aggregated student loan debt data and estimates that the class of 2016 will graduate with an average of $37,172 in student loan debt. Here are the latest statistics on student debt for 2017:
- Average monthly student loan payment is $351
- In 2012, 71% of graduates with 4-year degrees had student loan debt
- 66% of public college graduates had loans averaging $25,550
- 75% of private nonprofit college graduates had loans on average of $32,300
- 40% of student loan debt was used for graduate and professional degrees (such as law or medicine)
Half of College Loans in Default is less than $16400
A new publication by the group Demos examines even more student loan statistics. Not only do 1 in 5 Americans have student debt, one third of millennials and more than half of under age 40, African-American households also carry student loans. Interestingly, the study showed that even those with small loan amounts defaulted at nearly the same rate as those who owed the highest amounts. As an example of why this happened, read this story about a student who took out a loan for a few classes but was unable to finish college.
Other key findings include:
- 40% of borrowers are either 90+days delinquent or in default
- The average loan of those in default is $16,381
- 1/3 of borrowers in default owe less than $10K, 56% owe less than $20K
- Even those who did graduate with college degrees still default or fall behind on student loans
- Nearly half of those who are behind or in default on student loans have had credit cards or other accounts in delinquent status
Student Loan Changes for 2017
The LA Times, Forbes magazine and other publications are predicting changes for student loans and student debt with the new administration. The Los Angeles Times reports that during his campaign, Trump suggested capping annual student loan payments at 12.5% of the borrower's income and then forgiving what was left after 15 years of payments. The Obama administration also offered the possibility of student debt forgiveness after 20 - 25 years. Senator Elizabeth Warren proposes refinancing loans at current or lower interest rates. Forbes magazine suggests that Trump wants to move the lending to banks and away from the federal government, allowing student borrowers to shop lower interest rates. New legislation and the recent confirmation of Betsy DeVos means that changes in student loans and debt could be forthcoming in the new year.
College tuition increases and more generations looking to college after high school reflect an ongoing trend of student debt. 2017 and the next few years will be interesting as student debt and the student loan industry experience changes still to be determined under the new administration. With 30-somethings being the hardest hit age group, student debt also affects the economy as a whole with delinquent payments on other bills and a slowdown of broad entrepreneurial efforts.
American consumers work hard to fulfill their obligations in a timely manner and require a respectful and sometimes firm approach to recovery.