An analytical report on the debt burden facing U.S. borrowers today—and the post-pandemic policy changes that will shake it up.
Navigating student debt can be like trying to solve a Rubik’s Cube blindfolded, so we’ve teamed up with career data journalist Emily Barone to decode the maze of U.S. student loans for you. We hope this helps you make more informed decisions about choosing schools, seeking financial aid, and paying it down under various scenarios.
A post-secondary education is an investment for the future. It’s one of the top ways to bolster job opportunities, job earnings, and career advancement. These outcomes can lead to lifelong benefits of financial security, including access to higher quality housing and health care.
Earnings data from the Bureau of Labor Statistics show that employed workers with a bachelor’s degree or higher earn 1.8 times more than workers with a high school education who did not attend college.
But like all investments, education has an initial cost. And in the United States, that cost has risen significantly over recent decades, making it evermore difficult to pursue a degree without financial aid.
At the same time, the pandemic has disrupted historical borrowing trends and spurred new policies that will shape student borrowing—and repayment—in the coming months and years. Studocu, an international platform designed to help students share helpful study materials for their courses, has been watching these developments unfold. We have written this report with the goal of helping Studocu users and the general public understand the landscape of student debt as it stands today.
This report offers insights into the challenges facing student borrowers as the country enters an uncertain post-pandemic period. The information presented is a culmination of data sources from authoritative research institutions, the Federal Reserve system, and government agencies, as well as Studocu’s own analyses of reputable databases.
In particular, we relied on the Department of Education’s “College Scorecard,” which contains comprehensive metrics on post-secondary costs, federal loans, and repayment and default rates for schools across the country. And we included insights from our own proprietary surveys of students who use our platform. Studocu believes that, in any discussion about higher education, student voices should be heard.
While we cannot predict how the government may alter lending or repayment policies going forward, or how the U.S. economic situation might look in the future, we have included a wide range of historical charts and observations that explain the extent to which borrowers tend to accrue and pay off debt depending on economic factors, school type, and personal background.
These insights are most useful to prospective university students who are currently assessing the benefits of post-secondary degrees against the debt loads they will carry. These incoming students, who are often about to take on student debt for the first time, are most exposed to the uncertainty surrounding student loans: the government repayment policies that are rapidly changing, the job market and the economy upon their graduation, and other unknown circumstances that they will face years from now.
In this respect, we hope that students armed with knowledge and insights from this report will be able to make more informed decisions about choosing schools, seeking financial aid, and paying it down under various scenarios.
Current, incoming, and graduated students—as well as their families and the country as a whole—are entering a new era of student debt shaped by the COVID-19 pandemic.
For decades, student loan debt soared as more people were enrolling in post-secondary education at the same time that college costs were increasing and government policies facilitated borrowing. As this report will discuss in depth, university education became increasingly unaffordable in the shadow of the Great Recession, when schools were struggling to find financing in the depressed economy and raised tuition to fill the gaps. Many Americans chose school—and the student debt that came with it—over the tough job market.
But then, things began to change. As the job market recovered, prospective students were more tempted to bypass expensive degrees to start their careers. Between the fall of 2010 (when undergraduate enrollment peaked) and the fall of 2019, undergraduate enrollment at degree-granting institutions dropped 9%, from 18.1 million to 16.5 million students, according to the National Center for Education Statistics (NCES).
Lower enrollment didn’t mean fewer loan holders—at least at first. That’s because students were still coming into the loan system faster than they were leaving it, so the federal student loan portfolio continued to grow from 34 million recipients in 2010 to 43 million in 2018. But as the decade came to a close and the job market boomed, the U.S. loan portfolio stabilized: The number of loan holders had finally started to plateau and the amount of debt those people held wasn’t growing nearly as fast as during the recession and post-recession years.
Then COVID-19 hit, ushering in a new, questioning mindset about the value of education in a virtual world. Undergraduate enrollment dropped even further, to 15.4 million by the fall of 2021. One NCES survey from August 2021 reported that 16% of adults who had household members who planned to take classes that fall had canceled those plans for at least one member. The most common reason was inability to pay due to income changes from the pandemic. The result: fewer student loan recipients and less new debt.
But by that point, student loan debt was already sky high—the second largest consumer debt in the U.S. only to mortgages. The pandemic put a spotlight on a national financial burden that was weighing on more than 40 million people. As many workers lost their income, the federal government under President Donald Trump issued an emergency student loan forbearance program to pause interest accrual and borrower repayments. President Joe Biden extended that program after taking office.
Now, that program is ending. Interest on student loans resumes September 2023, and payments will start to come due the following month. For many, this will be a harsh reality, particularly among those who were hoping for a loan forgiveness measure proposed by President Biden in August 2022 to provide some—or complete—relief. (The Supreme Court struck down Biden’s sweeping forgiveness plan in June 2023.)
Although mass student debt cancellation is off the table, the Biden administration is rolling out other loan relief measures. These policies will alter repayment terms and potentially reshape—once again—what student loan debt looks like in the U.S.
PART 1: How student loans work in the U.S. and other countries
Ready to take a deep dive into each topic? Stick with us as we unravel the complicated world of student loans, one blog post at a time. Part 1 will take a look at how student loans work across the world.
Sharing this is a part of our commitment to creating a more level playing field in education across the world.
Want to see the full report with the detailed analysis? Download it here