The value of outstanding student loans in the United States has more than doubled in ten years by 119.51%.
This new staggering record translates to a 1.64 trillion by the end of 2019 third quarter. Compared to the Q3 of 2009, the loan debt stood at $771.7 billion.
Data compiled by Learnbonds.com indicates that between 2015 and 2019, the student loan debt grew by more than 30% to the current $1.6 trillion. To put this into perspective, if the current rate of growth is considered, the outstanding value of student loans in the US might hit $2 trillion by 2024.
By the end of Q3 in 2012, the student debt rose by an average of 14% every year to $966 billion from $510 billion in 2004. Outstanding student loan debt increased by 70% between 2008 and 2013, only half the rate of growth over the first half of the decade.
Interestingly, over the last 10 years, the Consumer Price Index increased by 19%. Student loan balances are now 7.6% of the size of GDP, up from 5.1% in 2009. The data compiled from both federal and private loans.
Federal and Private Loans
Federal loans come with a fixed interest rate that is perennially lower than private loans’ interest.
For example, the direct subsidized loan with the maximum amount of $5,500 attracts 4.45% in interest.
On the other hand, private loans have more options like fixed interest rate, variable interest rate, and income-based monthly plans whose interest rates vary depending on the lender and credit history.
According to data by Rosevellete Insitute, 65% of 2018 graduates have a student debt that is putting more pressure on US households. In the class of 2018, the average student loan debt was $29,200.
The class of 2017, on average, owe $28,650 translating to a total of more than $1.489 trillion. During the same period 10 years ago, the loan debt stood at $589 billion. Americans carry, on average more than $35,359 in student loan debt by the Q3 of 2019. That’s a more than 26% increase in five years and a 2% increase compared with the first quarter of 2018.
The Rising Cost of College education
Notably, with increasing loans, enrollment into universities has not changed. Data indicates that enrollment fell by 7% between 2010 and 2017. However, fewer students are borrowing more to pay for tuition, transportation, electronic devices among other items.
Generally, the cost of college in the US has been rising over the years. At in-state public colleges during the 2019-2020 period, the average tuition and fees are about 73% less than the average at a private college. For public colleges, it stands at $10,116 compared with $36,801 for private colleges.
The increase in the US student loans highlights one of America’s most significant and widespread financial burden.
A 2019 survey by Sallie Mae titled ‘How America Pays for College’ the majority of American households usually weigh financial concerns more heavily compared to academic needs when choosing a college. For most families, the cost of college plays a key role in decision making.
Progress has been made in regards to addressing the student loan debt crisis. For example, in 2010, President Barack Obama signed a law that eliminated $60 billion in unnecessary subsidies to private lenders. The funds were channeled into grants for low-income students and the federal government began making fixed, low-interest loans directly to students.
