Nearly 45 million Americans carry student loan debt, totaling $1.7 trillion, according to federal data, and those numbers aren’t likely to slow down.
The cost of private and public college has steadily increased over the past 10 years, according to student loan data platform Education Data Initiative.
Public tuition has grown from an average of $8,778 in 2016 to $10,400 this year. Private school tuition has soared from $27,942 to $39,967 over the same period.
The average federal student loan borrower had an eye-opening $37,780 balance, according to federal data. But how does your debt compare to others? A good way to answer that question is to consider the average balance of borrowers by age.
“An average balance of just over [$37,000] shows that the cost of higher education is expensive, and it’s likely that students will need to rely on federal funding to foot the bill,” Leslie Tayne, a debt attorney and owner of New York-based Tayne Law Group, told The Independent.
In general, younger borrowers have lower student loan balances than their older counterparts. Those aged 24 and younger have an average balance of $13,806 - that’s the lowest among all borrowers. People aged 50 to 61 carry the highest amount of federal student loan debt at $48,875.
Here are the average balances for the five age groups that the Department of Education tracks:
- 24 and younger: $13,806
- 25-34: $33,300
- 35-49: $45,673
- 50-61: $48,875
- 62 and older: $44,906.
Of the five age groups the Department of Education tracks, the two youngest cohorts are the only ones who’ve reduced their balances since 2017 - 36.3 percent for those age 24 and younger and 2.4 percent for those 25-34.
Older borrowers are facing a steep increase as interest builds up in their accounts over time - balances are up 177 percent for those age 62 and older.
Those starting college should think about the long-term consequences of student loans before applying for them, Tayne said.
“It’s so important that borrowers understand the long-term cost of borrowing before they take on tens of thousands of [dollars in] debt, especially as many student loan borrowers attend school at a young age and some aren’t versed in personal finance at that time,” she said.
There are signs that the country’s youngest borrowers are getting the message.
Of the five age groups the Department of Education tracks, the two youngest cohorts are the only ones who’ve reduced their reliance on federal student loans over the past nine years.
Total debt has fallen 36 percent for those 24 and younger and 2.4 percent for those aged 25 to 34.
Older borrowers are facing a steep increase in balances as interest builds up in their accounts over time - 177 percent for those aged 62 and up.
For those with student loans who’ve recently finished college and are ready to start a career, moderation is important, said Stacey Black, a financial educator at Boeing Employees’ Credit Union, in an email to The Independent.
“One of the biggest financial mistakes new graduates make is immediately stretching their budget to match a new salary, whether that’s signing for an expensive apartment, financing a new car, or taking on additional monthly expenses before establishing financial stability,” Black said.
Keeping expenses low will help borrowers free up cash to pay down their debt faster.
But how that debt repayment takes place is up for debate, Black said. Some borrowers prefer the snowball method, where you pay off your balances from smallest to biggest. Others believe the right approach is the avalanche method - pay off your debt from balances with the highest interest rates to the lowest.
Black recommends the avalanche method for student loan borrowers.
“In general, high-interest debt like credit cards should usually be addressed first because those balances can grow quickly and become more expensive over time,” she said.
“Student loans often carry lower interest rates and more flexible repayment options, particularly federal loans, so borrowers may have more room to strategically manage those payments while focusing on eliminating more costly debt first.”
This article is sponsored by Credit Karma. We may earn a commission if you engage with their services using links in this article
Read MoreThis is the net worth needed to join America’s top 10%
Retirees share biggest mistakes they made before stopping work
Dollar General gives bleak message about shoppers as they struggle with surging costs
Hedge fund that teamed up with Travis Kelce to save Six Flags wants to explore a sale
Elon Musk eyed as investor for Warner-Paramount merger: report
