Average Student Loan Debt by Age
Average student loan debt by age is increasing at an alarming rate. With many people struggling to make ends meet and falling back on educational loans, you are no stranger to the rising average loan debt average across all ages. There are many factors that determine average student loan debt by age. If you want to get rid of high interest rates and eliminate your average student loan debt by age, read on.
People aged 60 and over constitute the bulk of the average student loan debt by age. Over 44.5 million people have student loans registered on their files, adding up to almost $1.3 trillion in total student loan debt. This is a big number, and it is increasing each year. The average student loan debt by age in this age bracket is therefore projected to double in just ten years.
Two factors account for the increase in the average student loan debt by age. First, there is the steady rise in the number of people aged 60 and above, and secondly, there is an increase in the number of direct federal student loan borrowers. Direct federal student loan borrowers are the people who borrow loans from the federal government directly. The government provides them guaranteed repayment and they are also eligible for low interest rates and flexible terms.
So as per this trend, student loans from the federal government are soon to start flowing to a greater number of people aged 60 and above. And the number of students aged 70 and above is also expected to increase in the next few years. It is therefore expected that average student loan debt by the end of the decade will be double what it stands presently.
If current trends are anything to go by, it is very likely that graduates from U.S. universities will have to take higher average debt loads after graduation in order to support themselves after completing their education. And many U.S. graduates will have to take additional advanced courses or pursue advanced degrees to get a better paying job post graduation. This means that graduates will need even bigger average student debts to support themselves and their families. This is especially true of the unemployed graduates, who will find it extremely difficult to get another job in a economy that is suffering.
Another factor that is bound to impact the amount of student debt will be the interest rates. After graduating, the interest rates for student loans will always be slightly higher than those of adults. The level of the interest rates is dependent on the risk that the bank feels about the borrower. The banks feel more at risk when students have heavy debt obligations at hand. That’s why their interest rates are always a bit higher than the adult debt borrowers; they are taking less risk with a student who has a lot more experience behind him or her.
In addition to the average student loan debt by age, graduates of top business schools will also end up with bigger debts. Some students may choose to defer their federal reserve loans or their student debt until they can finish college. Others may choose to start their careers in a different sector of the economy where there is more job stability and average salaries. A graduate who starts his or her career as a waiter will find herself with considerably larger bills after graduation than a graduate who starts off as an engineer. Graduates of top business schools are also more likely to secure a good paying position in their field of choice upon graduation than those who choose a different line of work.
One thing that borrowers do not realize is that interest rates on federal student loans and those on state and local loans will increase after graduation. It is important that borrowers understand what the interest rate will be when they start making payments after graduation. If a borrower takes out a Stafford or Perkins loan, the interest rate may be tied to the average student loan debt by age, whichever is higher. However, borrowers do have the option of refinancing in order to lower their monthly payments. This allows for a larger payment amount, which could reduce the cost of borrowing for them.