US Student Loan Debt Reaches All-Time High of $1.2 Trillion

Although debt in all other major consumer-lending categories has decreased since the recession, student loan debt continues to grow.

Although debt in all other major consumer-lending categories has decreased since the recession, student loan debt continues to grow.

A new report by Experian has confirmed what many students know to be true: student loans are increasing at an alarming rate.

While debt in every major consumer-lending category decreased from 2008 to 2014 in the United States, student loans increased by 84% in that time period, the analysis released on September 9, 2014, found. The total amount of student loan debt has reached an all-time high of $1.2 trillion, exceeding home equity loan, credit card, and automotive debt.

Overall, 40 million Americans—13 million of whom are young adults aged 18 to 34 years—have at least 1 open student loan. On average, these individuals have a total of $29,000 in student debt spread out among 3.7 loans.

“What is a really compelling statistic is that the average person has nearly 4 student loans,” said Michele Raneri, vice president of analytics for Experian, in a press release. “Student loans are the only credit vehicle where a lender continues to extend credit year after year without knowing the person’s ability, or even willingness, to pay. The borrower may not yet have had the chance to demonstrate positive payment behaviors, which is a criteria used in other types of lending scenarios.”

Of the current open student loans, 61% are in repayment with an average monthly payment of $279. A regional analysis revealed that Mississippi had the highest number of loan repayment delinquencies, while Massachusetts had the lowest number.

The analysis did report some positive news for those with student loans. Among young adults aged 18 to 34, the average credit score for those who had at least 1 open student loan is 640, which is 20 points higher than the average for the age group. When managed responsibly, student loans can help young adults build and establish credit history, the finding suggests.

“Keep in mind that a student loan is a debt obligation just like any other,” said Rod Griffin, director of public education for Experian, in the press release. “Once that loan is open, the lender may begin reporting it to the credit reporting companies. Missing payments affects your credit just like any other debt. Payment history is the most important factor in credit scores.”

Young adults with student loans also had higher average incomes than all credit-active individuals in their age group, as those with loans earned an average of $41,800 per year, compared to $34,000 overall.