What is high student loan debt?
Your number can be deeply personal. You might be embarrassed by it, enough to keep it a secret from your loved ones. Your number can affect every decision you make in your life.
We talk about your student loan debt numbersure.
Many people are ashamed of how much student debt they have, whether or not they currently benefit from the education that he allowed them to obtain.
But where do you stand? If you’re wondering if your number is high, it depends on how you measure it.
You can compare it to averages, judge your ability to make your payments, or even measure it based on your emotional reaction.
There’s no wrong way to measure it, but you have to do it with a purpose. If you decide your number is high, what will you do about it? We encourage you to make an action plan to reduce your number. (More on this later.)B
Promotion : If you’re not sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you build a solid financial plan for your student loan debt. Check The Student Loan Planner here.
Are you average?
If you want to know where you stand compared to others, finding the average is the metric to track. Below is a set of debt averages based on different factors. One way to classify debt as high is if it is above average. Take a look at the statistics and judge for yourself.
The national average amount of student debt leaving college (for undergraduate and graduate students) is $37,000and the average payment amount is $351 per month. These figures are so inclusive that they may not accurately represent your situation. If you want to dig deeper, we’ve tried to break down the numbers a bit more.
Undergraduate students typically leave college with around $30,000 in student loan debt, according to our research on average student debt. This is the maximum amount of federal loans available to dependent students (those who rely on their parents’ income information to complete the FAFSA). Independent students can take out a maximum of $57,500 in federal student loans.
The typical graduate degree the holder leaves the doctoral school with $57,600. Not counting those with notoriously expensive medical or law degrees, graduate debt can amount to more than $153,000.
If you want to get into the details, check out the following numbers, based on:
These data were collected from the ASF websiteare current estimates and represent federal student debt only.
What is “high” student loan debt?
So with averages in mind, what is considered “high” student loan debt.
In general, we believe student debt is “high” if it’s not worth the salary you’ll potentially earn over your lifetime. It is an approach based on ROI (return on investment). See our full details here.
Based on our analysis, if you are a man and owe more than $100,000, or a woman and you owe more than $70,000, you have high student debt and your debt is probably not worth the income you will earn during of your life.
Here are some other stats broken down for you based on where you went to school or your age:
What type of school did you attend?
If you attended 4 years of public college, if you have more than $23,800 in debt, you are above average.
If you attended a private, nonprofit school and have more than $34,251 in debt, you’re above average.
If you attended a for-profit collegeand you have more than $19,162 in debt, you are above average.
How many student loans according to your age?
Depending on your age, you may be average or above average when it comes to the amount of student debt you have. Makes sense – if you’re only 18 or 19 you shouldn’t have much. But if you’re 22 or 23, you may be at your peak of debt.
- 18 or younger: $6,000
- 19 to 24 years old: $15,662
- 25 to 24 years old: $31,434
- 35 to 49 years old: $36,311
- 50 to 61 years old: 34,660
- 62 or older: 31,294
Focus on your own payments (i.e. your “personal” finances)
This approach is based on your own finances and focuses on your payments rather than your total. Even if your total debt is below average, if your payments are too high for you to afford, it could indicate that your number is high. Now is the time to focus on your unique situation, instead of comparing yourself to others.
One way to determine how high your figure is is to determine what percentage of your income your payments represent. This is how the government and federal loan officers determine if your payments are unreasonable (and this is similar to how they calculate payments on income-based reimbursement plans). The Department of Education calculates your income percentage by taking the amount of your annual payment and dividing it by your discretionary income.
It may be helpful to see how your payments compare to the Ministry’s affordability standard. However, it might be more useful to compare your payment to your own affordability standards.
This requires careful consideration of your budget, including your income and all expenses, even those that change each month. Outlining your monthly finances like this will also give you an idea of how your student loan payment fits into your overall financial picture.
Also keep potential financial goals in mind during this step. If your student loans prevent you from pursuing new goals, or worse, if they push your budget into the negative, your figure may be too high.
Also, when deciding if your payments are high, pay attention to what each payment covers. How much goes to interest? How much applies to principal? Even if your payment is not high by your standards, you may feel that there is not enough money for the principal. The more interest your payment claims, the longer you will make those payments.
What is your emotional response?
This metric is much more subjective than the others, and it will vary from borrower to borrower. Even if your total debt and payment amounts are below average, you may feel stressed or frustrated with your student loan debt.
Stress from any source can cause health problems, but financial stress has been shown to affect productivity and concentration levels in the workplace. You don’t want to jeopardize your debt-paying job by worrying too much about your debt!
So if your student loan debt is causing you a lot of stress, you may decide that your student loan number is high enough to prompt you to take action.
Why is it important?
Determining if your student loan debt is high can be a significant achievement. High debt can take a long time to be paid off, which can affect financial decisions, such as to buy a house or have children. If you’re one of the many putting off major life events, assessing your student loan debt may just be the first step in a journey toward financial freedom — or at least comfort. financial.
If you have decided that your number is too high, it’s time to make a plan to lower it. Depending on what part of your student loans you think is high, there are different steps you can take.
Reduce your loan balance. The following methods are aimed at reducing your principal and generally getting rid of your student debt:
- Pursue loan forgiveness programs, such as the Civil Service Loan Forgiveness or Teacher loan forgivenessif applicable.
- Ask your employer if they have a student loan repayment assistance – if they don’t, ask for one!
- Focus on larger or more frequent payments to reduce principal as quickly as possible. Even just paying your normal monthly amount divided into weekly payments may reduce the term of your loan.
Reduce your payments. Follow these steps to make your monthly payments more affordable:
- Consider your repayment options. Some options base your payment amount on your income and end with loan forgiveness, if you haven’t already paid it in full at the end of the new term. You can pay more overall, but it will free up your monthly finances so you can focus on your other goals.
- Save money elsewhere in your budget. If you don’t want to change your student loans, you can reduce your other expenses to better reflect your student loans. If you need help on how to do this, check out 7 ways to save (almost) effortlessly.
- Earn more money every month. Choose your favorite side hustle and start working!
Reduce your stress. If you’re struggling with stress, especially when it comes to your student loans, try doing some of the following:
- Reduce your payments or your principal, whichever is causing the most stress. Use the tips listed above.
- Practice meditation, yoga or other relaxation techniques. You can often find guided practice sessions online.
- Regular exercise. Exercise improves both your physique and Mental Health. Sometimes, even if you have your student loans under control, you can still feel stress thinking about your debt. When this happens, a simple walk or run can calm you down and take your anxiety away.
At the end
Knowing your number is a great first step in positioning yourself for financial freedom. If you continue to be overtaken by your number, remember that just because your number is high doesn’t mean you’re in the worst position. Some of the toughest student borrowers are in the lower tier of student debt. Every borrower’s situation is different.
If you’re not sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you build a solid financial plan for your student loan debt. Check The Student Loan Planner here.
Take a break, create an action plan for your situation and try to see the good in your student loans.
Do you have student loan debt? How do you think your balance compares to the national average?
