Student Loan Debt Crisis Breakdown

a worried college student thinking about his student loan as he looks at a piggy bank near his laptop

Alys Tomlinson / Getty Images

Student loan debt has reached astronomical levels in the U.S., with 43 million Americans carrying an estimated $1.5 trillion in federal loan student debt and $119 billion in private student loans. The class of 2019 left school with an average of $28,950 in student loans. The financial burden of student loan debt proves heavier to bear for some borrowers than others.


On Tuesday, Nov. 22, 2022, the Biden administration extended the pause on payments and interest on federal student loans for the eighth time. Borrowers with federal student loans won’t have to make payments, and loans won’t resume accumulating interest, until 60 days after court cases challenging Biden’s student loan forgiveness program are resolved or the Department of Education is allowed to move forward with the program. If the cases aren’t resolved by June 30, 2023, payments will resume two months after that.

What's Behind the Student Loan Debt Crisis?

There are several factors that have contributed to the student loan debt crisis in the U.S., beginning with rising tuition prices.

For the 2020-2021 academic year, the average cost of tuition, fees, and room and board at a public four-year university totaled $43,280 for out-of-state students. The cost climbed to $54,880 for students at private four-year universities. Having a 529 college savings plan can help with paying college expenses but only 37% of families use them, according to Sallie Mae's 2020 How America Pays for College Report. Instead, many families borrow to pay for college, including loans taken out by both students and parents. Borrowed money covered 24% of college costs for 2020.


On Aug. 24, 2022, President Joe Biden announced via Twitter the cancellation of $10,000 of federal student loan debt for eligible borrowers, and $20,000 for federal Pell Grant recipients.

The lure of loan forgiveness may also be seen as a contributing factor. The federal Public Service Loan Forgiveness program offers student loan forgiveness for grads who pursue a career in public service. A proposed income-driven repayment announced Wednesday, Aug. 24, would make it much easier for borrowers outside of public service jobs to have their loans forgiven.


On Aug. 24, 2022, President Joe Biden’s administration proposed a new plan for federal student loan repayment that caps monthly payments at 5% of your monthly income. After 10 years, whatever remaining balance you have would be eliminated if the original loan balance was $12,000 or less.

The student loan debt crisis is compounded by the number of borrowers falling delinquent on their loans. As of the fourth quarter of 2019, 11.1% of student loan borrowers were 90 days or more delinquent or in default on their loans. This suggests that a substantial number of borrowers are struggling to keep up with their loan payments.


Typically, the Internal Revenue Service (IRS) treats forgiven debts as taxable income. However, student loans that are forgiven between January 1, 2021, and December 31, 2025, are tax-free, thanks to provisions in the American Rescue Plan Act of 2021.

Certain Borrowers More Affected by the Debt Crisis

Student loan debt can take a toll financially, particularly if it keeps borrowers from pursuing other financial goals, or delinquency affects their credit rating. But, not every borrower feels the impact of student loan debt to the same degree.

Women Feel the Student Loan Debt Pain

According to an analysis by the American Association of University Women (AAUW), women own nearly two-thirds of student loan debt in the U.S., totaling almost $929 billion. Compared to men, women are more likely to finance a college degree and they tend to borrow more money to do so. That in itself isn't necessarily problematic, but the real student loan debt crisis happens when those same female grads have to start repaying their loans.

The gender pay gap often prevents women from making the same progress in paying off their loans as men. As of 2019, women working full-time earned approximately 82% of what men are paid. A lower income means less money to apply to student loan debt. Within the first four years after graduation, for instance, men paid off an average of 38% of their outstanding debt, according to AAUW, while women paid off 31%.

That slower debt payoff can make it more difficult for women to get ahead financially. Consider retirement savings. According to the 18th Annual Transamerica Retirement Survey, twice as many men versus women are very confident about their ability to retire with a comfortable lifestyle. Women have a median of $2,000 saved for emergencies, compared to $8,000 for men. Working men have an estimated median of $76,000 saved for retirement while working women have a median of $23,000.

Minorities Also Bear the Brunt of Student Loan Debt

Women aren't alone in the student loan struggle. According to the National Center for Education Statistics, 71% of Black students borrow federal loans to pay for attendance at four-year colleges, compared to 56% of white students. Hispanic and Black students are more likely to graduate with higher levels of debt than white students, and they're also more likely to default on their loans.

According to the AAUW research, Black women take on more student loan debt on average than any other group. Black and Hispanic women also struggled more than other groups with a slower debt repayment rate. Thirty-four percent of women overall and 57% of Black women who were repaying their student loans reported being unable to meet their essential expenses within the past year.

The Broader Economic Impact

Student loan debt can affect more than just individual borrowers; it also has the potential to have a wider economic impact.

The housing market, for example, has made a strong recovery since the 2008 financial crisis but according to one study, student loan debt delays homeownership for borrowers by an estimated seven years. That can cause supply and demand to swing out of balance if more homes go up for sale, but fewer buyers are shopping, which could lead to lower housing prices.

Student loan borrowers may also be more reluctant to use other types of credit, such as credit cards or car loans, meaning less interest and fee revenue for lenders and banks. When fewer people buy cars or homes, use credit cards, or spend in general, it directly affects businesses and can slow down economic growth.

While not necessarily an upside, more students attending a college means a better-educated workforce, which can potentially lead to lower unemployment and higher tax revenues. But, the negative student loan debt crisis can't be ignored.

In the meantime, there's no clear solution to the student loan debt crisis. Finding ways to control rising higher education costs seems like an obvious step but implementing rules and regulations designed to do that is easier said than done. For students, the only recourse, for now, can be to educate themselves as much as possible about the costs of a college degree and the financial implications of taking on student loan debt before they borrow.

Frequently Asked Questions (FAQs)

How do you get rid of student loan debt?

If you aren't able to repay your student loan debt, there are a few options available to settle it. There are forgiveness programs, such as Public Service Loan Forgiveness, which forgive your debt when you satisfy certain requirements. Your debt may also be canceled or discharged under certain scenarios, such as when your school is closed, you become disabled, or you file for bankruptcy.

How do you buy a house with student loan debt?

Buying a home while carrying student loan debt may be more difficult than usual. Student loans will impact your debt-to-income ratio, which means you'll have a harder time getting a mortgage. If you're unable to tackle your student loan debt issue, you can try improving your credit score or using down payment assistance programs. Both of these steps can improve your chances of getting a mortgage for a home.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Center for American Progress. "Addressing the $1.5 Trillion in Federal Student Loan Debt."

  2. The Institute for College Access and Success. "Project on Student Debt."

  3. Department of Education. “Biden-Harris Administration Continues Fight for Student Debt Relief for Millions of Borrowers, Extends Student Loan Repayment Pause." 

  4. College Board. "Trends in College Pricing 2020," Page 3.

  5. Sallie Mae. "How America Pays for College," Page 23.

  6. Sallie Mae. "How America Pays for College," Page 9.

  7. Twitter. “@POTUS, Aug. 24, 2022 at 11:32 a.m.

  8. Department of Education. “Biden-Harris Administration Announces Final Student Loan Pause Extension Through December 31 and Targeted Debt Cancellation To Smooth Transition to Repayment.”

  9. Federal Reserve Bank of New York. "Household Debt Tops $14 Trillion as Mortgage Originations Reach Highest Volume Since 2005."

  10. "The American Rescue Plan Act of 2021," Page 182.

  11. American Association of University Women. "Deeper in Debt: Women & Student Loans."

  12. American Association of University Women. "Fast Facts: The Gender Pay Gap."

  13. American Association of University Women. "Deeper in Debt: Women & Student Loans," Page 2.

  14. Transamerica Center for Retirement Studies. "19th Annual Transamerica Retirement Survey - 19 Facts About Women’s Retirement Outlook," Page 13.

  15. Transamerica Center for Retirement Studies. "19th Annual Transamerica Retirement Survey - A Compendium of Findings About U.S. Workers," Pages 83-84.

  16. National Center for Education Statistics. "Status and Trends in the Education of Racial and Ethnic Groups 2018," Page 134.

  17. The Brookings Institute. "Black-White Disparity in Student Loan Debt More Than Triples After Graduation."

  18. National Association of Realtors. "2017 Student Loan Debt and Housing Report," Page 2.

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