How student loan debt became a trillion-dollar problem for Americans

Millions of Americans have student loan debt, amassing to more than $1.6 trillion by the end of last year, according to the Federal Reserve Bank of New York.

It’s the result of a decades-long explosion in borrowing coupled with soaring education costs.

The Federal Reserve data shows people under the age of 30 are more likely to have student loan debt compared with older adults – underscoring the crippling burden on another generation of Americans.

But the impact is multigenerational. Nearly a quarter of the outstanding student loan debt is owed by Americans who are 50 and older.

College graduates do earn more than those who do not have a degree. In 2021, full-time workers age 25 and older with a bachelor’s degree out-earned those with a high school diploma and no degree by about $27,000 annually, when comparing median salaries, according to data from the Bureau of Labor Statistics.

But these high-paying jobs come at a price. In the 2020-2021 academic year, the College Board found that 51% of students who graduated from public four-year institutions left with federal debt averaging more than $21,000 per person. That figure is slightly higher for those who went to a private institution, with 53% graduating with federal debt averaging more than $22,000.

College costs have soared, outpacing the inflation rate, according to Mamie Voight, the president and CEO of the Institute for Higher Education Policy.