Tens of millions of Americans have to go into debt in order to afford a college education. As if that weren't bad enough, the amount of debt is so high that it can take a lot longer to pay off than you'd ever imagine.
It'd be natural to think that students fresh out of college would owe the most in student loan debt, given that they haven't had any time to pay it off. Yet surprisingly, that's not the case, and it only goes to support the idea of just how long student loans hang over those who need them.
Student loans are a mid-life crisis
Those aged 35 to 49 have $636.2 billion in federal student loan debt outstanding, according to the latest research on student loans from The Motley Fool. That amount is spread out across 14.7 million borrowers.
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Interestingly, there are more people with outstanding student loans from the younger age group between 25 and 34, at 15.1 million. However, the total amount is much smaller, weighing in at $494.6 billion. Those 24 and younger actually have a relatively tiny amount of debt outstanding of just $99 billion across 7.2 million borrowers.
So what's behind the lingering student loan debt crisis for middle-aged Americans? Here are a few of the factors involved:
- Undergraduate education tends to be cheaper than getting a graduate or professional degree. Even those who go straight through after getting a bachelor's degree are in their mid-20s or older before completing graduate school, which explains the big spike from the 24 and younger group.
- Many people return to school to get a graduate or professional degree after spending a considerable amount of time in the workforce. That's where borrowers between 35 and 49 get much of their outstanding debt.
- Moreover, the amount of debt people incur for graduate school takes longer to repay. Even if you were relatively young when you got that post-graduate degree, it's likely that it'll take you into your late 30s or 40s to get it paid down -- even under the best of economic circumstances.
Note too that this research understates the student loan problem because it only includes federal loan balances. Plenty of people have to resort to private student loans to bridge the gap and get their educational expenses paid, which only exacerbates the problem.
A wake-up call for younger generations
Fortunately, families have gotten the message, and they're doing everything they can not to rely as much on student loans. When you look at trends over the past several years, you can see that average debt per student among younger age groups has started to ease up a bit.
Source: The Motley Fool.
However, it's going to take time for that more prudent approach toward student loans to work its way up the age ladder. Meanwhile, there are signs that even older borrowers 50 and older continue to struggle, as per-person loan debt has continued to rise among borrowers 50-to-61 years of age.
Watch for relief
It's exactly this problem that has led many government officials to look seriously at student loan forgiveness, including the most recent plan from the Biden administration. Although the Supreme Court appears likely to reject the Biden plan in its current form, some policymakers believe an attempt on different legal grounds could have a greater chance of eventual success.
In the meantime, though, struggling borrowers have no choice but to do their best and take advantage of what relief is still available. Yet as the pause on repaying student loans is set to end by late summer, you can expect calls for more extensive relief to get louder and louder.
