Average Student Loan Debt

There is a growing epidemic in the United States and all around the world: college graduates are leaving school burdened by more debt than we’ve seen in generations. A recent study found that some ten-percent of students are leaving their college campuses with at least $40,000 in student loan debt while countless others are leaving with total liabilities several times greater than that amount.

Calculating the amount of debt held by individuals isn’t an easy task. For one, many students are now using alternative payment methods, and it is near impossible to gauge what portion of the average student credit card debt can be attributed to university. We can, however, interpret that average student loan debt from the various education-only lenders like Sallie Mae and the Department of Education’s Direct Loans company.

Average Student Has Loan Debt

One thing is sure: the problem is systematic. According to 2008 data, students have an average loan debt of $23,200 at graduation. That statistic ($23,200) has doubled since 1996, when the average student left college with only $13,200 in debt.

Sixty-seven percent of all 2009 graduates left school with debt; that is two out of three students for those who aren’t math majors. 😛

Research shows that student loan debt totals are growing at a rate twice, or even thrice, that of inflation. The advance in average student loan debt, however, is mostly a recent development. Since 2000, the cost of going to college has risen some 4.9% per year over and beyond the rate of CPI-core price inflation, and well above the average inflation rate for any single category excluding health care and energy.

Bankruptcy Law

Most agree that it is bankruptcy law that continues to drive the student lending programs. Because student loan debts cannot be discharged in bankruptcy; that is, you just can’t write them off, lenders are willing to lend almost any amount of money to young students and their parents.

Keep in mind that since you cannot discharge your student loan debt (in fact, your wages can be garnished) it is almost certain that Direct Loans and Sallie Mae are sure to get their money back.

As such, lending to a 20-year old is pretty safe, since the average life expectancy says they’ve still many years to make good on their debts. The average person living in the United States lives to 78.3 years of age. Males live to 75.6 years on average, while females live to 80.8 years. I’d take that bet!

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