Year over year, the average amount of student debt per borrower continues to rise. College prices have been climbing, so students continue to borrow more money to pay for their education. This burden causes recent graduates to delay major life events, just so they can pay their loans.
So, what is the average amount of student debt?
Currently, total student debt sits at over $1.5 trillion. According to the Federal Reserve, seven in ten adults enroll in some form of higher education. Of these people going to college, 42% have taken on some form of debt. Around 20% of them claim that the costs of their degree was higher than the benefit. Students who borrow for college leave with an average of $28,400 of debt. This is an almost 30% increase from the average borrower debt in 2001.
Are people paying back their student debt?
This is a tough question to answer, because while many people are paying back their debt, some are defaulting on their student loans. The default rate for has rose from 10% for graduates in 1996 to 17% for graduates in 2004. This percent also rises for people who have lower amounts of debt. Those who have $5,000 in debt are more likely to be behind on payments than those with $100,000 in debt. This is because more debt is linked to higher education, and an increase in salary.
With the cost of education not likely to fall anytime soon, there needs to be a solution to the pile of debt that is growing. One such solution is the use of Income Share Agreements as a debt-free alternative to student loans.
