In a report released by Experian, student loan debt as increased by more than $833 billion and currently sits at $1.4 trillion overall. According to CNBC, the average balance is $34,144, which is up 62 percent over the last ten years. Moreover, the article goes on to say that a separate Consumer Financial Protection Bureau reported that borrowers who owe more than $50,000 has tripled.
Experian has broken down the average balance per consumer and the average number of loans people are carrying from the Silent Generation to Generation Z. Here is a basic rundown:
- Silent: $26,341, 1.9 loans
- Boomer: $36,246, 2.8 loans
- Gen X: $39,802, 3.5 loans
- Gen Y: 33, 579, 4.4 loans
- Gen Z: $11,830, 2.6 loans
Roughly 13% of the American population is carrying at least one loan, although Experian said that it is becoming more common for an individual to have more. The average number per individual has jumped up to 3.7 from 2.4 over the course of the last 10 years.
The increase in the cost of higher education is connected with student loan debt, coupled with the high demand of people seeking a college degree. According to Michelle Raneri, vice president of analytics at Experian, she stated that “student loan balances are on the rise, which is a result of the increasing cost of higher education…I expect that the price of getting a higher education will continue to increase, so I wouldn’t be surprised if the loans increase also,” she said.
Raneri goes on to say that delinquencies are actually down by 3 percent since 2007. She believes that this is indicative of borrowers being more knowledgeable about credit and are managing their loans better in the wake of the Great Recession.
According to a survey conducted by Citizens Bank, they found a common feeling amongst graduates—buyer’s remorse. 57 percent stated that they regret taking out as many loans as they did, and another 36 percent said they would have chosen not to go to college if they had understood more fully the financial burdens that come with higher education.
With higher education becoming one of the largest expenses people will likely make in their lifetime, whether it be for an individual or parents sending kids to college, it is clear that the issue of student debt and the cost of higher education will continue to persist. As noted by Rod Griffen, director of public education at Experian, higher education in some cases is a worthwhile investment for that individual will typically be making a higher income to pay off the debt. Not only is it important for those to know the terms of their loans as Griffen concludes, but it is equally important for people to understand if the investment is worth it so that they may avoid taking on more debt than they can handle in the long term.