Student Loan Statistics

Education One Of Life’s Largest Purchases

The largest purchase some people will ever make is higher education.  The costs for higher education has soared over the last 20 years, and wages are stagnant.  Because of these two factors, more Americans are burdened by student loan debt than ever before.  The statistics are staggering.  The class of 2016 is estimated to graduate owing over $37,000 in student loan debt.  The total outstanding student loan debt is estimated to be $1.4 Trillion dollars.  And, an estimated 44 million Americans have this debt.

General Debt Facts

          General Student Loan Facts

  1. $1.4 Trillion Dollars in student loan debt.
  2. Over 44 million Americans have student loan debt.
  3. 11% of Americans are delinquent on student loan debt
  4. 3.9 million student loan borrowers are estimated to be in default
  5. 2.7 million student loan borrowers are estimated to be in forbearance
  6. 3.4 million student loan borrowers are estimated to be deferment
  7. 1.7 million borrowers are estimated to be in the grace period

Borrower Debt Profile

The borrowers that owe student loan debt fit into the following statistics.

  1. 66% of all debtors graduate from a public college
  2. 75% of graduates from private nonprofit colleges have debt
  3. 88% of graduates from for profit colleges have debt
  4. 88% of graduates that received Pell Grants have student loan debt
  5. Private student loans debt is on the rise.
  6. 1.4 million undergraduates borrowed with private loans in 2012.

Student Loan Debt By Type

Student Loan Debt by loan type:

  1. Stafford Subsidized Loans  29 million borrowers $267 billion dollars owed.
  2. Stafford Unsubsidized Loans  27 million borrowers $423 billion dollars owed.
  3. All Stafford Loans  32 million unique borrowers $690 billion dollars owed.
  4. Grad PLUS   1 million borrowers $50 billion dollars owed.
  5. Parent PLUS  3.3 million borrowers $75 billion dollars owed.
  6. Consolidation Loans   12 million borrowers  $439 billion dollars owed.
  7. Perkins Loans   2.7 million borrowers  $8 billion dollars owed

Graduate Student Loan Debt

Combined Undergraduate and Graduate Debt by Degree

  1. Medicine and Health Sciences – $161,000
  2. Law – $140,000
  3. Master of Arts  $58,000
  4. Master of Education $50,000
  5. Masters of Science $50,000
  6. Masters of Business Administration – $42,000

What You Don't Know About Student Loans

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What You Don't Know About Student Loans

The biggest mistake that most people make is thinking that student loans are like all other consumer debts. They are not.  Student loans are not subject to normal consumer protections. Borrowers that get in over their heads can’t go to bankruptcy court to discharge their loans.

Borrowers that default are subject to harsh penalties including interception of tax refunds, government disability pay, or social security payments through administrative garnishment orders. That means the government doesn’t have to sue you to take part of your money to pay this debt.

Understanding student loan debt, the crisis, how we got here, and how borrowers can think differently about higher education, its costs and whether or not it is an investment is covered in the book.

Get a free assessment of your student loan options!

Individualized assessment and options for lower payments and loan forgiveness

Loan forgiveness form on a wooden table.No two borrowers are the same.  Two borrowers who started the same college on the same day, majored in the same subject, and graduated on the same day can have wildly different student loan debts.  Why? Because student loan debt is based upon your family circumstance and no two families are alike.  Our process includes analyzing all of your current debt. Based upon that analysis, we will determine which programs you may qualify for, provide you with a written debt model (including, the cost of forbearance, and your savings over time), make recommendations on your best options, and assist in choosing the programs that will best suit your financial needs and personal situation.

You will see your options as simple and straight forward.  Find out your specific options for lower payments and loan forgiveness.  Make an appointment for a customized assessment today.

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Don't Let Student Loans Stop You From Owning A Home

Student loan payments can have a huge impact on the debt to income ratio of a potential home buyer because they can severely impact the debt to income (DTI) ratio.  Many lenders follow the 28/36 qualifying ratio to determine whether you can afford a home, and if so what will the interest rate be.

The 28 of the ratio refers to a general consensus rule that buyers should not spend more than 28% of the household income on housing.  The 36 of the ratio refers to the general consensus rule that buyers should not spend more than 36% of gross monthly income on all debt (including the student loans and new mortgage).

Example debt-to-income ratio (DTI)Dalia and Dax together earn $6,000 per month.  Their total monthly debt payments are $2000 per month.  Their DTI (debt payments/income) is 33%

 

Qualifying for a lower payment option can improve your DTI because the full payment that the borrower is required to make is lower and therefore lowers the overall DTI.  Not all lenders look at student loan debt in the same way.  Some underwriters will base their decision on a percentage of your total debt, versus the payment you are required to make under an income-driven plan.

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Retirement or Student Loans? With the Right Payment Plan You Can Have Both

Five to six figures in student loan debt is no longer unusual. At the time of taking out the debt most borrowers are optimistic that they would be able to borrow for college and maybe for graduate school, confident that they would be able to earn enough to pay back the loans, meet their current living expenses, take vacations, save for their children’s education and pay for retirement.  For far too many student loan borrowers their incomes are too meager to stretch so far.

For many people, the choice between paying back their student loans and saving for retirement seems like an impossible choice: pay student loans at the expense of retirement savings.  In 2016, it is estimated that 70% of all borrowers have delayed saving for retirement.  However, it is both well known and well documented that delaying saving for retirement comes at a huge cost.  For every year that a person delays saving for retirement their contributions have to increase two-fold.  The two fold increase is the result of two factors caused by the delay: there is one less year to save before retirement, and because there was no savings, the lost returns have to be made up.  But it doesn’t have to be that way.

If the average graduate in 2016 has $37000 in student loan debt, how do the numbers work for to pay both retirement and student loans.