Student loan debt in the United States has grown enormously in recent years and is now one of the largest forms of consumer borrowing in the country. Though the benefits of a college education outweigh the costs in most cases, many graduates are concerned about entering a weak job market and worry that lingering debt could hinder their financial futures.
Most economists see student loan programs as a sound investment in U.S. workers and essential for maintaining the country’s competitive edge, but questions remain about the appropriate level of federal involvement. A debate has also emerged over whether the government should forgive student loan debt and, if so, how much it should forgive. President Joe Biden’s administration faces increased pressure to cancel student debt amid the COVID-19 pandemic and resulting economic disruption.
How much student debt is there?
Student debt has more than doubled over the last two decades. At the end of 2020, about forty-three million U.S. borrowers owed nearly $1.6 trillion altogether in federal student loans. Additional private loans bring the total to about $1.7 trillion, surpassing auto loans and credit card debt; only home mortgage debt, at $10.3 trillion, is larger.
Student debt has grown because more and more students are attending college. In the late 1980s and early 1990s, most high schoolers did not enroll at colleges or universities; of those that did, less than half borrowed money to do so. In recent years, about two-thirds of high schoolers have enrolled, and most of them have taken out student loans.
The average student is also taking on more debt: the balance per borrower rose by 26 percent from 2009 to 2020, according to U.S. News and World Report. Students are generally borrowing more because college tuition has grown many times faster than income. The cost of college—and resulting debt—is higher in the United States than in almost all other wealthy countries, where higher education is often free or heavily subsidized. Meanwhile, U.S. states have pulled back funding for public universities and colleges in the wake of the Great Recession