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Getting Ahead: Why are student loans an issue?

Posted Nov 02, 2022 9:00 AM
By Patricia Jones, Alliance Community Task Force: Creating Opportunity

Student loan debt has been in the news since several candidates in our last presidential race offered plans to provide assistance. Why is this even an issue?

Since the year 2000, student loan debt has doubled. Forty-eight million Americans owe for their college loans. That’s about one in seven Americans. Those ages 25-to-34 are the most likely to hold student loan debt, but the greatest amount is owed by those 35 to 49 — more than $600 billion. The average total student debt continues to hover around $30,000. Though the benefits of a college education outweigh the costs in most cases, many graduates worry that their debt could impact their finances for years to come, redirecting money that could be invested in homes or retirement programs.

Altogether this student debt is $1.7 trillion, second only to home mortgage debt of $12 trillion. The federal government holds $1.6 trillion of that student loan debt. The U.S. government invests in higher education through need-based tuition grants, student loan programs, veterans’ benefits, and research grants; an educated and highly skilled workforce promotes national prosperity. Highly educated workers provide greater tax revenues, are generally more productive and civically engaged, and rely less on social programs. Most experts believe postsecondary education is fundamental to a dynamic, innovative economy.

Most nations subsidize higher education to a much larger degree than the United States. And the cost of college education here has skyrocketed, both at public and private colleges. States had been contributing a large amount of tax dollars to public colleges and universities, but after the Great Recession of 2008, most states severely cut this funding. Since that time, the loan balance per borrower rose by 25 percent.

Another thing to understand is that one-third of the total debt is held by the seven percent of borrowers who owe more than $100,000. How does this debt get so high? We’ll talk about this next week and look at how interest is figured.

The United States Department of Education is currently offering Federal Student Loan Debt Relief for loans owed to the government. Go to for more information. The program provides eligible borrowers with full or partial discharge of loans up to $20,000 to Federal Pell Grant recipients and up to $10,000 to non-Pell Grant recipients. Pell Grants are offered to low-income students based on their FAFSA. The program is not available for loans from private lenders.