Student Debt Has Increased Sevenfold over the Last Couple Decades. Heres Why

Student debt in the United States has grown tremendously throughout recent decades. After adjusting for inflation, federal student debt increased sevenfold from 1995 to 2017, rising from $187 billion to $1.4 trillion. That growth was driven by a range of factors, including an increase in the number of borrowers, a higher average amount borrowed, a low rate of repayment, and changes in the types of colleges attended.

That sharp rise in student debt has sparked debate among policymakers on whether, and how, to address it. On one hand, incurring student debt can help improve access to higher education, which can lead to a number of economic benefits for those who graduate. On the other hand, excessive levels of student debt may impose a financial burden on some households and sectors of the economy.

Below is an examination of the factors driving the growth in student debt and its implications. Data presented focuses on federal loans, which account for 92 percent of all outstanding student debt.

More Students are Going to College and Taking Out Loans

Put simply, one of the reasons that student debt has been growing is because the number of people taking out such loans has been rising. In 2017, 8.6 million Americans took out a federal student loan – more than double the 4.1 million borrowers in 1995. Read more