The Growing Crisis of Student Loan Debt

The Growing Crisis of Student Loan Debt

Student loan debt is a growing crisis in America. With tuition costs skyrocketing, students borrow more than ever to pay for college. This has led to a massive $1.75 trillion student loan debt nationwide. Let’s look at how we got here and what it means for borrowers and our economy.

Tuition Keeps Going Up

Over the past 20 years, the cost of a 4-year degree has risen by 214%. This is an astronomical increase that far outpaces inflation. As a result, students have had to turn to loans to cover the costs. In 2020 alone, graduates finished school with an average of $30,000 in student loan debt.

Public School Costs

While private universities have massive tuition bills, public schools have also seen significant increases. For in-state students at public 4-year institutions, average tuition has jumped from $4,360 to $10,740 from 2000 to 2021. That’s a 146% increase. With less help from state funding, public schools have had to raise tuition to cover expenses.

Room and Board Adds Up

In addition to just tuition, room, and board costs have also climbed steeply. The average room and board rate for on-campus housing at 4-year public schools was $11,950 in 2021. At private non-profit schools, it was $13,270. These mandatory living costs quickly add thousands to a student’s total bill.

Borrowing Keeps Pace

With the total cost of college increasing every year, students have had to borrow more and more. Among graduates of the class of 2020, 55% had taken out student loans. The average loan balance was $30,030, up 20% from just five years earlier.

More Students Are Borrowing

As prices rise, student loans are becoming necessary for more and more students. In 2000, only 45% of graduates had student loan debt. But over two decades, that number has climbed by ten percentage points to the current 55% rate. College is simply becoming unaffordable without loans for most students.

Borrowers Owe More On Average

In addition to more students borrowing, the ones who do borrow also take on higher balances. From 2000 to 2020, the average loan balance at graduation has shot up from $16,000 to over $30,000. That’s an 88% increase over just 20 years.

The Costs of High Debt

These high debt loads are having real consequences for borrowers and the economy. From delayed milestones to payment troubles, student loans burden millions.

Buying a Home and Saving Become Harder

With hundreds of dollars in monthly payments, high student loan debt makes it harder to afford a home or save for retirement. First-time home buyers are hitting record lows as loans eat into budgets. The Fed estimates 20% of borrowers reduce retirement contributions to manage payments.

Default Rates Remain High

Despite repayment options like income-driven plans, default rates remain over 10%. Borrowers who fall behind face wrecked credit, garnished wages, seized tax refunds, and more. It can take years to recover from a default.

Loans Limit Entrepreneurship

Research shows that areas with higher student debt have lower rates of small business formation. Loans likely limit would-be entrepreneurs who need help to afford loan payments alongside startup costs and inconsistent income. This drags on economic growth and dynamism.

Who Holds All This Debt?

With over 45 million borrowers, student loan debt cuts across vast swaths of the population. But it disproportionately impacts particular groups.

Women Hold More Debt

Women hold almost two-thirds of America’s student loan debt. This is partially driven by gender pay gaps requiring women to borrow more. But it also reflects that more women enroll in college. Discrimination and the motherhood penalty then make loans harder to repay.

Significant Racial Disparities

Due to longstanding wealth gaps, Black students depend more on borrowing for college. Four years after graduation, Black graduates owe, on average, nearly $25,000 more than white graduates. This debt reinforces broader economic inequality.

Graduate Degrees See High Balances

While undergrads borrow large amounts, graduate programs lead to truly massive debt. With six-figure price tags common at law, medical, and business schools, median debt for graduate degrees ranges from $71,000 to $185,000.

Finding a Solution

With such a far-reaching issue, student loan debt needs bold solutions. Here are two policy ideas that could provide relief.

Loan Forgiveness Programs

One way to tackle current debt is through forgiveness programs. Ideas proposed range from canceling $10,000 across the board to erasing all deficits for lower earners. Forgiveness would free up income that borrowers could spend or invest. Opponents worry about the costs.

Free Public College

Rather than just forgiving loans, making public colleges tuition-free would address the root cause. This would curb student debt from rising further. However, tax hikes would likely be needed to replace tuition revenue. Getting this passed politically could prove challenging.


Student loans were once a minor issue but have become a national crisis. With tuition outpacing inflation, students have had to borrow record amounts. This debt then hampers their finances and the broader economy. Though the issue is complex, creative policy solutions could relieve millions of borrowers. By addressing student debt, we can restore opportunities for a generation weighed down by loans.


Q: What percentage of graduates from the class of 2020 had student loan debt?

A: 55% of 2020 graduates had student loans.

Q: What is the average student loan debt balance for graduates with a bachelor’s degree?

A: In 2020, graduates with a bachelor’s degree had an average student loan debt balance of $30,030.

Q: True or false: Women hold almost two-thirds of America’s total student loan debt.

A: True. Women hold almost two-thirds of America’s total student loan debt.

Q: What two policy proposals could address the student loan debt crisis?

A: Two policy proposals are loan forgiveness programs, which could cancel some debt for borrowers, and free public college, which would eliminate tuition at public universities.