Outstanding student load debt has reached $1.6 trillion. Both presidential candidates have proposed limited student loan forgiveness. Benefits Pro published an article that analyzes student dept. (1)
Among those with student loans, the average loan amount is $24,155. (2) Considering that the average worker with a bachelor’s degree earns $24,000 more per year than the average worker with a high school diploma, (3) then the average loan amount is reasonable and manageable. The problem is with the outliers, those who have above average debt and/or below average income.
The lack of financial knowledge and understanding is another problem for some students. Forty-two percent of participants in a study said they would not take a student loan if given a chance to rethink their decision. That could mean that they didn’t have enough information about how loans work, or they don’t have the financial discipline to manage loan repayments.
Interestingly, the youngest generation (Gen Z) holds least amount of student dept ($15,798) and is most optimistic about paying off the debt. The next generation group (Millennials) hold an average debt of $21,367 and Gen X holds an average of $34,075.
50% expect to pay off their loans within 5 years and only 11% expect to pay of loans after 20 years.
Some get help from family to pay off debt. Parents helped 31% of Gen Z and 19% of Millennial pay off debt and spouses helped 25% of Gen Xers and 22% of Millennials pay off debt.
(1) https://www.benefitspro.com/2020/06/29/americans-with-student-debt-owe-24155-on-average-412-100295/
(2) Other sources indicate a higher average loan amount. For example, Forbes indicates an average student load debt of $32,731. https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=592b1537281f
(3) https://smartschoolsusa.org/blog/the-average-salary-by-education-level-2019-2020