5 Surprising Student Loan Facts

Some products in this article are from our partners. Read our Advertiser Discloser.

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.

When Did Student Loans Start?

female college student in red dress

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 that 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. In 2022, 66.1 percent of graduating students enrolled in college.

And along with that increase in college attendance came a steady rise in student loan debt numbers.

In May 2023, the average college graduate had $37,338 in student loan debt, up six percent from 2020 alone.

Today, student loan debt is the second most common type of debt. Home mortgage loans are the most common debt type.

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?

In July 2023, the Federal Reserve shows a total of $1.75 trillion owed in student loan debts.  This massive amount of money owed is spread out over 43.5 million Americans.

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. Prior to the Great Recession, private student loans were more common.

Today, 92% of student loans in 2023 are federal student loans, according to Forbes.

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 for today’s student loan borrowers aged 20-30 is $503 a month. 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 $503 over a ten-year period and gain a return on investment of eight percent, they’d have over $63,000 in the bank.

If they continue contributing for twenty years, they’d have nearly $200,000.

Having $200,000 is a nice addition to an early retirement fund or paid-for house. But instead, most college graduates are giving their hard-earned money to lenders.

3. What Percentage of College Graduates Have Student Loans?

The latest numbers show that nearly 71% of people carry student loan debt balances when they graduate from college.

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.

To add to their financial difficulties, as recently as 2023 nearly 62% of college graduates held jobs that don’t fall into their major.

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?

Sixty percent of student loan debt holders are carrying debt from undergraduate degrees. Forty percent of the current student loan debt totals is from graduate degrees.

Therefore all types of degrees are leaving 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?

One out of every ten Americans has defaulted on a student loan, and 5% of all student loan debt is in default.

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 of $37,000 is more than most car loans today.

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.

Income-driven repayment plans will base your monthly payments on your income and family size. For some, your payment could be as low as $0 per month. They can also provide loan forgiveness if your loan is not paid in full after 20 or 25 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.

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

The standard repayment term is 10 years for federal student loans.

But there are several repayment plans that can reduce the monthly payment amount. Keep in mind that the total interest charges can be higher due to the longer repayment term.

Here are some of the federal repayment plans:

  • Income-based repayment plan
  • Income-contingent repayment plan
  • Pay as you earn repayment plan
  • Extended repayment plan

These repayment plans can reduce your monthly payment amount but extend your repayment term up to 20 years.

Your new monthly payment amount may be a percentage of your monthly disposable income.

Government employees and eligible non-profit employees can also explore the Public Service Loan Forgiveness (PSLF) program. After 120 months of qualifying monthly payments, any remaining balance is forgiven.

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’ effort.

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 of out debt quickly.

One downside of the repayment benefit is that all employer contributions are taxable.

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.


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.