Student loan debt has skyrocketed since 2003 by 430% as household debt has reached historic highs in the last 20 years.
Student loan debt is now tied with automobile loan debt, consisting of 10% of overall household debt. Auto and mortgage debt have outpaced inflation, while credit card debt has grown by 33%, though from 2010 to 2016, it was even lower than in 2003.
The report by the Kaplan Group found that Generation X on average possesses the highest amount of student loan debt, at $44,290, and has the largest number of federal loan borrowers, at 21.2 million. With the oldest members of Gen X being 59 years old, there is great concern about the generation’s ability to save for retirement due to the hefty student loan debt.
While millennials possess an average student loan debt of $32,800, their parents’ generation has a higher amount of debt. Baby boomers face an average debt of $42,520, with much of those loans taken out to support their children’s education. If they were to default on their loans, they are at risk of having their Social Security benefits garnished.
Rising student debt has coincided with an increase in college tuition. From September 2002 to September 2022, tuition inflation has grown by 68%. In the past 10 years, the average cost of tuition has risen by a little more than $3,000.
Dean Kaplan, an author of the study, suggested there should be more of a “holistic approach to debt management that includes educational initiatives, policy reform, and individual financial strategy enhancements.”
“The findings from this study underline the need for a holistic approach to debt management that includes educational initiatives, policy reform, and individual financial strategy enhancements,” Kaplan wrote.
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“Enhanced awareness and planning programs tailored to each generation can help mitigate the burden of student loans,” Kaplan said in a statement. “For example, offering matched savings programs for Millennials saving for their first home could address the indirect effects of student debt.”
Meanwhile, the Biden administration has canceled $144 billion in federal student loans. Plans to cancel more through the Saving on a Valuable Education plan are moving forward after a court of appeals ruling. The Biden administration is being sued by several state attorneys general over the SAVE plan.
