Student Loan Debt: 2021 Statistics and Outlook

The numbers are staggering—and still on the rise

Nearly one-third of all American students now have to go into debt to get through college, and the average student loan debt reached a record high of $40,904 in 2021. Collectively, they owe about $1.75 trillion.

As any recent college student—or parent of a student—knows, obtaining a degree requires a much bigger financial sacrifice today than it did a generation or two ago. Over the past three decades, the average cost to attend a private four-year institution is more than three times the cost to attend a public four-year institution, and it more than doubled at public four-year schools, according to the College Board.

For many Americans, footing the bill through savings and investments simply isn’t sustainable. The upshot is that more students and families are relying on loans to pursue higher education, and the average student loan debt keeps growing.

Key Takeaways

  • Soaring college costs and pressure to compete in the job marketplace are big factors for student loan debt.
  • Nearly one-third of American students now need to borrow to pay their way through college.
  • Borrowers who don't complete their degrees are more likely to default.

Overall Average Student Debt

How big a role do student loans play in today's colleges and universities? Here is a snapshot of borrowing.

Student Loans Snapshot
$1.75 trillion Amount of student loan debt outstanding in the U.S.
43% Percentage of college attendees taking on debt for college education
$40,904 Average amount of student loan debt per borrower
Source: Education Data Initiative

The total amount of outstanding student loans was $1.75 trillion in 2021, growing from $1.7 trillion in 2020 and $1.57 trillion in 2019.

Average Loan Balances

Roughly 43% of all Americans who went to college took on some form of debt to do so. Student loans were by far the most common borrowing options (95% of those who hold education debt took out student loans). However, 26% of people used other forms of borrowing, including credit cards (21%), home equity lines of credit (4%), and other types of credit (12%).

Most of this debt is carried by younger adults. Borrowers between the ages of 25 and 34 had over $500 billion in federal student loan debt as of the fourth quarter of 2021. Adults ages 35 to 49 carried even more debt, with student loan balances totaling $622 billion. People who are 50 to 61, meanwhile, owe about $281 billion in student loan debt.

Decline in Delinquencies

Eighteen percent of adults who took out student loans were behind on their payments, according to the latest figures available from the Federal Reserve, and about 5% of all student loan debt was at least 90 days delinquent or in default.

However, these numbers understate the problem, thanks to emergency relief measures regarding student loan repayments that were put into effect in March 2020. Those measures halted collections on defaulted student loans and suspended loan repayments. An executive order signed by President Biden on his first day of office extended the relief measures, and the most recent extension has moved the deadline through Aug. 31, 2022.

About 27% of people who entered college in the 2003–2004 academic year have since defaulted notes. If that growth continues at its current pace, roughly 38% of borrowers in that age bracket will default at some point by the year 2023.

People who get advanced degrees tend to accumulate more debt but are also likely to make payments on their student loans on time.

Borrowers who never completed a degree tend to have a harder time paying off their loans. About 31% of people who took out student loans but never completed an associate or bachelor's degree are behind on their payments. Though people with more advanced degrees tend to take on more debt, they're more likely to make their student loan payments on time. Of the former college students with less than $15,000 of outstanding debt, 21% are delinquent. However, only 17% of adults with $15,000 or more in loans are behind on payments.

Economic Impact of Debt Cancellation

The sheer size of student debt can be characterized as a weight on the U.S. economy as well as a burden on the millions of individuals who owe it. About 92% of student loan debt is backed by the U.S. government.

That fact has made it a political issue. During the 2020 presidential election, some Democratic candidates—among them Sen. Elizabeth Warren (D-Mass.) and then-Senate Minority Leader Chuck Schumer (D-N.Y.)—suggested canceling some or all student debt. They said it could be done by a president's executive order rather than through legislation. In 2021, Sen. Warren continued to call on the administration to cancel up to $50,000 in federal student loan debt for each borrower.

The American Rescue Plan passed by Congress and signed by President Biden in March 2021 includes a provision that student loan forgiveness issued between Jan. 1, 2021, and Dec. 31, 2025, will not be taxable to the recipient.

Pros and Cons of Debt Cancellation

Moody's Investor Service predicts wiping out student debt would yield a stimulus to economic activity that is comparable to tax cuts in the near term. Over the longer term, it could increase homeownership and boost the creation of small businesses. Outright debt cancellation would boost real gross domestic product (GDP) by $86 billion to $108 billion per year, according to one study from Bard College's Levy Economics Institute.

However, analysts warn of the risk of moral hazard caused by implying that the cost of your decisions will be borne by someone else. This could lead to even higher student debt burdens, as borrowers assume forgiveness will be ongoing.

Another argument suggests that forgiving student loan balances will provide, at best, a weak stimulus to the economy, because the savings are realized in small amounts over a long period, depending on how much a borrower pays back monthly with full or partial forgiveness.

Here are some answers to commonly asked questions about student loan debt in the U.S. and the U.K.

What Percentage of the U.S. Population Has Student Loan Debt?

As of 2021, about 43% of all American college attendees were saddled with student debt. That figure reflects the growing importance of a college degree to getting a well-paying job. It also reflects just how much college costs have increased.

How Much Is the Average Student Loan Debt in the U.K.?

Students who graduated from U.K. universities in 2020 owed an average of £45,000 in student loan debt. By the end of March 2021, the estimated value of outstanding loans is £141 billion. The government predicts only 25% of borrowers (full-time undergraduates) will repay them in full.

How Do You Get Your Student Loans Forgiven?

The U.S. government will currently forgive, cancel, or discharge some or all of an individual's student loan debt only under several specific circumstances. Teachers in low-income schools and public service employees may be eligible for forgiveness of a portion of their debt. People who are disabled may be eligible for discharge of the debt. Those who think they may qualify for loan forgiveness should contact the student loan servicer of their loans.

The Bottom Line

Most students who attend college are hoping to earn a degree that will dramatically increase their earning power after graduation. Still, for many adults, much of those earnings will have to go toward paying back student loans. This is a heavy burden to carry, especially before someone has earned their first professional paycheck.

Article Sources
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  1. Board of Governors of the Federal Reserve System. "Report on the Economic Well-Being of U.S. Households in 2020 - May 2021."

  2. Education Data Initiative. "Student Loan Debt Statistics."

  3. College Board. "Trends in College Pricing and Student Aid 2021 Full Report," Page 12.

  4. Federal Student Aid. "Federal Student Loan Portfolio," Download, "Portfolio by Age."

  5. Federal Reserve Bank of New York. "Quarterly Report on Household Debt and Credit," Page 3.

  6. The White House. “Statement by President Biden Extending the Pause on Student Loan Repayment Through August 31st, 2022.” 

  7. Federal Student Aid. "COVID-19 Emergency Relief and Federal Student Aid," Select, "History of the COVID-19 Emergency Relief Flexibilities."

  8. The Brookings Institution. "The Looming Student Loan Default Crisis Is Worse Than We Thought," Page 4.

  9. MeasureOne. "Academic Lending Study," Download, "Most Recent PSL Report," Page 3.

  10. Elizabeth Warren (U.S. Senate). "Schumer, Warren: The Next President Can and Should Cancel Up To $50,000 In Student Loan Debt Immediately; Democrats Outline Plan for Immediate Action in 2021."

  11. Elizabeth Warren (U.S. Senate). "Warren, Schumer, Pressley Applaud Extension of Student Loan Payment Pause, Reiterate Calls for Biden to Cancel Student Debt."

  12. U.S. Congress. "H.R.1319 - American Rescue Plan Act of 2021."

  13. CNBC. "Erasing Student Debt Would Be a Small Stimulus but Would Create a 'Moral Hazard,' Moody's Says."

  14. Levy Economics Institute of Bard College. "The Macroeconomic Effects of Student Debt Cancellation," Page 6.

  15. Levy Economics Institute of Bard College. "The Macroeconomic Effects of Student Debt Cancellation," Page 49.

  16. Urban Institute. "Is Student Loan Forgiveness an Effective Form of Economic Stimulus?"

  17. U.K. Parliament, House of Commons Library. "Student Loan Statistics."

  18. Federal Student Aid. "Student Loan Forgiveness."

  19. Federal Student Aid. "Who's My Student Loan Servicer?"

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