Updated November 2026.
A lot has changed since this post was first written. Student loan payments resumed in October 2023 after the payment pause ended, the SAVE plan has ended, and a new Repayment Assistance Plan (RAP) launched July 1, 2026 for new loans. The figures below have been updated to reflect the student loan system as it stands in November 2026.
As you are probably aware, the student loan problem in the U.S is continuing to increase.
College becomes more expensive each year meaning students and families borrow more money.
If you’re saving for college, currently in college or making student loan payments, these student loan facts may surprise you.
Table of Contents
When Did Student Loans Start?
As with any debt, it wasn’t always the norm for people to borrow money to attend college.
It wasn’t until 1840 that the first student loans were available to students who attended Harvard.
Furthermore, it wasn’t until 1958 that federally backed student loans were available to college students attending any school.
The goal?
To help more American students attend college.
The hope was to be more competitive with other countries like Russia, which had more students attending college at the time.
The plan worked.
In 1960, 45.1% of graduating students enrolled in college in the U.S.
Fast forward 60 years, and the majority of high school graduates attend a two-year or four-year college. 62.8% of 2024 high school graduates were enrolled in college in October 2024, according to the Bureau of Labor Statistics. (The BLS has no 2025 reading because of the government shutdown.)
Along with that increase in college attendance came a steady rise in student loan debt numbers.
The average bachelor’s degree borrower owes $36,710, and the average federal balance across all federal borrowers is $39,547, according to the Education Data Initiative (2026). Graduate averages are roughly flat.
Today, student loan debt is the third-largest type of debt by balance, behind mortgages and auto loans. According to the New York Fed, in the third quarter of 2026, mortgage balances were $13.374 trillion, auto loan balances were $1.734 trillion, student loan balances were $1.656 trillion, and credit card balances were $1.285 trillion.
Avoiding student loan debt is difficult in today’s world.
The Most Interesting Facts About Student Loans
How are these larger debts affecting college graduates? Are their degrees putting them in a financial situation where paying off these loans is easier? Let’s take a look.
1. How Much Do College Graduates Owe?
The federal student loan portfolio is more than $1.7 trillion owed by 42.3 million recipients, according to Federal Student Aid (June 30, 2026). The all-in U.S. total, including private loans, is about $1.86 trillion. The borrower count has fallen in part because of forgiveness discharges and because borrowers have paid off their loans or left the active counts.
While rising college costs do account for the increasing student loan debt totals, ease in borrowing is also a factor.
Lenders have made it easier for college students to borrow money by having minimal guidelines for student loan approval.
Since the 2008 Great Recession, federal student loans serviced by the US Department of Education have increased. Before 2010, most federal loan volume ran through the Federal Family Education Loan (FFEL) program, where private lenders originated federally guaranteed loans. Since 2010, all new federal loans are Direct Loans from the Department of Education. Truly private loans were never the majority.
Today, 92% of student loans in 2026 are federal student loans, according to Federal Student Aid and Education Data Initiative figures.
2. What is the Average Monthly Payment for Borrowers?
The payment for most student loans isn’t as high as it could be considering the balance owed. This is thanks to longer student loan terms.
Also, the average monthly payment is about $434, and most borrowers pay between $200 and $299 per month, according to the Education Data Initiative. This is a challenging payment amount for most young borrowers.
Let’s look at that payment in terms of opportunity cost.
If a college graduate can avoid student loans and invest that $434 over a ten-year period and gain a return on investment of eight percent, they’d have about $79,000 in the bank.
If they continue contributing for twenty years, they’d have about $256,000.
Having $256,000 is a nice addition to an early retirement fund or paid-for house. Instead, most college graduates give their hard-earned money to lenders.
3. What Percentage of College Graduates Have Student Loans?
About 60% of bachelor’s degree graduates carry student loan debt, averaging roughly $30,000 at graduation.
This makes it tough for nearly three-fourths of college graduates to start saving to buy a home or car. Instead, their focus has to be on finding a way to pay back student loans.
Instead of a degree mismatch, look at underemployment: 52% of recent four-year graduates are underemployed one year after graduation, and 45% still are ten years out, according to the Strada Institute and the Burning Glass Institute.
What does this statistic mean?
College graduates might be earning lower incomes that make it tough to pay on their student loans as they are “overeducated” for their current job.
As a result, recent graduates may struggle to pay rent, buy food, and pay off other debts.
4. What Percentage of the Debt Was from Undergraduate Degrees vs Graduate Degrees?
Graduate borrowers are only about 21% of federal borrowers, but borrowers who borrowed for graduate school hold nearly half of all outstanding student debt. Grad PLUS loans ended for new borrowers on July 1, 2026, and new caps apply: $20,500 per year and $100,000 lifetime for most graduate programs, and $50,000 per year and $200,000 lifetime for designated professional programs.
Therefore, all types of degrees leave students with the burden of student loan debt.
Couple that with the rising cost of college, paying for college out of pocket is becoming increasingly difficult for students everywhere.
5. How Many Students are Delinquent on Their Loans?
More than 9.3 million recipients are in default, with $234 billion in defaulted balances — about 14% of the federally managed portfolio, according to Federal Student Aid (June 2026). About 20% of borrowers in active repayment were 30 or more days delinquent.
This is due to large student loan balances, unaffordable payments, and lower-than-expected post-graduate incomes.
Not to mention, the average student loan balance is $39,547.
Add large loan payments to basic survival expenses such as rent and many students are put in a position of having to choose to pay for housing or pay their student loans, and housing expenses have to win.
Federal Student Loan Forbearance
Borrowers with most federal student loans have some temporary financial relief. With forbearance, you won’t have to make a payment, or you can temporarily make a smaller payment.
Here is the recent timeline. The payment pause ended and payments came due again in October 2023. The 12-month on-ramp, during which missed payments were not reported as delinquent, ended September 30, 2024. The Education Department restarted collections on defaulted loans on May 5, 2025. Involuntary collections were paused again on January 16, 2026, and as checked on November 12, 2026, StudentAid.gov still lists collections through Treasury offset and Administrative Wage Garnishment as currently paused, with no restart date announced.
Income-driven repayment plans base your monthly payments on your income and family size. For earlier loans, IBR can provide loan forgiveness after 20 or 25 years; for new loans, RAP forgives any remaining balance after 30 years.
See Studentaid.gov for more details.
How Can I Pay Off My Student Loan Debt Faster?
If you have student loan debt and are looking for ways to unburden yourself from steep monthly payments, here are some helpful tips for paying your student loans off faster.
Do a Challenge Everything Budget
A Challenge Everything budget is created by scrutinizing every monthly expense you have.
Then, you ask yourself, “How can I reduce or eliminate this expense?”
The goal is to reduce monthly expenses, both essential and optional spending. Next, you apply the savings as an extra payment on your student loan.
Refinance Your Student Loans
Paying high-interest rates on your student loans is basically throwing away money that could be better used to help you pay off your debts faster.
Today you can actually refinance your high-interest student loans to a lower rate. Refinancing may let you qualify for a lower interest rate that reduces your monthly payment.
You may decide to refinance your federal student loans if you want a lower interest rate. However, refinancing federal loans means you forfeit your loan forgiveness benefits. Refinancing also permanently forfeits income-driven repayment and PSLF eligibility.
If you have private student loans, they do not have the same loan forgiveness perks as federal loans. There is no harm in refinancing private student loans if it can improve your finances.
There are several companies such as Credible that compare loan rates to refinance student loans. The comparison is free, instant and doesn’t impact your credit score.
If you prequalify for a lower rate, you can apply through Credible with your lender of choice.
Federal Student Loan Repayment Plans
For loans disbursed on or after July 1, 2026, the options are the Tiered Standard Plan and the Repayment Assistance Plan (RAP), the only income-driven plan for new loans. The Tiered Standard Plan is the fixed-payment plan for new loans, with a term that depends on the amount borrowed.
RAP payments are 1% to 10% of adjusted gross income (minus $50 per dependent), with a $10 per month minimum payment, and any remaining balance is forgiven after 30 years. Income-based repayment (IBR) remains for earlier loans: 10% of discretionary income and forgiveness after 20 years for borrowers whose first loan was on or after July 1, 2014, and 15% and 25 years otherwise.
The main repayment options now are:
- Tiered Standard Plan
- Repayment Assistance Plan (RAP)
- Income-based repayment (IBR) — for earlier loans
- Extended Repayment Plan — 25 years
PAYE and ICR both end no later than July 1, 2028, and the SAVE plan ended by court order and is no longer available. The Extended Plan runs for 25 years. For new borrowers, $0 payments no longer exist.
On taxes: income-driven repayment forgiveness is taxable as federal income again for discharges from January 1, 2026 — the 2021–2025 tax-free window expired — while Public Service Loan Forgiveness (PSLF) forgiveness remains tax-free.
Government employees and eligible non-profit employees can also explore the Public Service Loan Forgiveness (PSLF) program. After 120 qualifying monthly payments, any remaining balance is forgiven. RAP and IBR payments count toward PSLF, but Tiered Standard payments do not.
Increase Your Income
Another way to pay off debt faster is to increase your income.
If you’re finding that your current salary and expenses don’t leave any room for paying extra on your student loans, consider trying one or more of these great ways to make money.
Temporarily increasing your income is a smart way to reach your financial goals.
Work During College
A few decades ago, college students could work during the summer and pay their tuition bills. Not so anymore, but it’s still possible to have a college side hustle.
Current college students can work and use their earnings to offset college expenses. The best jobs for college students can maximize the students’ efforts.
Related Post: How She Thrifted to Help Pay For College
Employer Student Loan Repayment
In addition to a 401k and health insurance, more employers are offering student loan repayments as an employee benefit.
Employers make a small monthly payment to the student loan servicer. This perk helps young workers get out of debt quickly.
Employer student loan repayment is not all taxable. Under Section 127 of the tax code, employers can pay up to $5,250 per employee per year toward student loans tax-free. That treatment was made permanent in July 2025. Only amounts above $5,250 in a year are taxable wages.
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While this is our current reality, the rising student loan debt burden needs to be stopped.
We can’t continue to allow these hard-to-handle financial weights on young people who are simply trying to gain a better life for themselves.
One way to help people avoid student loan debt is to look for ways to reduce the cost of college. If you’ve not yet started college you need to look for ways to minimize or avoid how much money you need to borrow to go to college.
Summary
In conclusion, by making a plan for your money before you step foot on the college campus, you can help ensure that student loan debt won’t hinder your chances for a financially stable life.
