Americans Owe More On Student Loans Than Any Other Kind Of Debt

That money fleeing from your bank account every month is going more toward student loan debt more than any other kind of debt, says a new report. So now when you ask yourself, “Where does it all go?” you’ve got an answer.

The Washington Post cites a report from the Federal Reserve Bank of New York, which says we owe more for our education debts in the country than credit card or auto loan debt.

Nationally, student loan debt is at $870 billion, compared to $693 billion in credit card debt and $730 billion for auto loans, according to Grading Student Loans, a scholarly blog published by economists at New York Fed.

So who’s holding on to all that debt? The onus of one-third of the national balance is held by people ages 30 to 39 and another third older than that, which means only a small part of graduates are able to dispense of their debt while still in their 20s. Whoever those smart/lucky/savvy people are, I salute you.

For the rest of you slackers, $85 billion of the student loan debt is “past due,” so, tsk tsk.

Student loans surpass auto, credit card debt [Washington Post]


Edit Your Comment

  1. Dallas_shopper says:

    Note to self….fling self at parents’ feet and kiss their toes yet again for paying for me to attend school so I don’t have any student loan debt.

    • SBR249 says:

      Second this. Thank God my parents were willing to pick up the slack after (loan-free) financial aid. And also thank God for free graduate school education.

    • misterfweem says:

      Note to self: Post a smug comment at Consumerist regarding ability to pay for school entirely without parental help, through some small scholarships, grants, working summers and holding down part-time jobs during school time, ending up with only $1,500 in student loans which were paid off the first year after graduation. And for working full-time post-grad to pay cash for his and hers masters degrees.

      • Dallas_shopper says:

        I’m not trying to be smug, I’m trying to be grateful.

        • frank64 says:

          I took it as grateful too, it is just so different to get much positivity on the web that it might be taken wrong.

      • katarzyna says:

        Not that Dallas_shopper was in any way smug (you do sound grateful, Ds), but that was entirely possible 20 years ago. I had some savings, a decently paying co-op job, and I made it through without debt. Thing is, the situation is entirely different now. College costs in the US are out of control.

        And don’t think I’m being smug about it either – I’m grateful that I went to college before the costs went through the roof. My brother went to the same Uni I did, six years later. He had the same co-op job I did, similar savings, and was just as frugal as I was, but absolutely needed our parents help to get through.

        • Dallas_shopper says:

          Thank you; I wasn’t trying to be an asshole. :-)

          When I started college (in ’93) you couldn’t really work your way through anymore, but the level of debt you’d be dealing with after graduation wasn’t near what today’s grads are facing.

          Today’s kids have it much rougher than we did, for damn sure.

  2. eturowski says:

    Aaaaand don’t forget that 6.8% fixed interest rate (if you’re lucky) despite the ever-plunging rate set by the Fed, or the fact that the loans are non-dischargeable in bankruptcy, or the fact that Obama eliminated subsidized loans for graduate students. I am in for a wonderful repayment period…

    • Nigerian prince looking for business partner says:

      Wow, I had no idea that the rates were that high.

      I consolidated mine about 15 years ago at 4.0%

      • eturowski says:

        Also, once you max out your regular federal student loans (somewhere during the third/fourth year of med/law/vet/pharm school, the interest rate for the next bracket of federal loans (PLUS loans) jumps to 7.9%.

        • Nigerian prince looking for business partner says:

          That’s crazy, my private student loans aren’t that bad (prime + 0.5%).

          I’m very grateful for Uncle Sam picking up most of my tuition via the GI Bill. I’m even more grateful that my last deployment occurred right after 9/11, so I get the Post-9/11 GI Bill to pick up grad school, even after the MGIB paid for undergrad.

    • dolemite says:

      Man, that sucks. I consolidated mine like 12 years ago and pay 2.7%.

    • joescratch says:

      Repayment? Fuck that. They are never getting that money back.

    • tokyomonamour says:

      Mine is 8.0% accruing daily on principal. Every month, over $200 in interest is added to the top of the debt. At that rate, it will never be paid off unless I win a jackpot. Yet, I still send in over $400/month and the total balance due really doesn’t budge. I don’t make enough to seriously put a dent in it.

      • richcreamerybutter says:

        If it makes you feel better, I consolidated back in the days before the government provided that option. At the time, “Merlin Loan” was advertised in my University’s book store as a semi-private company (which was why I chose them). Later, the notorious Catherine Reynolds “saved” the company with full privatization and subsequent sale to Wells Fargo:

        My interest had been gradually increasing, and peaked at 10% right before the sale. Ten. fucking. percent.

        That is the basis of the student loan movement; they just want a fighting chance to pay the principal.

    • areaman says:

      That sounds kind of high for “lucky”. I consolidated at 5.1%

      Also the interest sometimes helps when I file my taxes. So the real interest rate is around 2-3% for me.

      • hansolo247 says:

        Actually, student loan interest is minimally deductible.

        Once you make $75K per year, you can’t deduct ANY of it, and it starts to phase out around $60K per year.

        So, if you can deduct interest and you’re in the 25% tax bracket and make less than the amounts above, your real rate is 3.825%. If you’re in the 22% bracket, you’re at 3.978%.

        If you make, say $67,500, your “real” rate is 4.4625%.

        Cold, hard facts. Deductions don’t make something cost half as much as it did before.

    • bsgk says:

      A few of my wife’s Stafford loans are currently at 0.11% after a few 0.25% discounts for online bills and autopay.

    • Hi_Hello says:

      3.375 :D

  3. tungstencoil says:

    I owe enough to purchase a (small) second home. Conscious decision made due to a lot of factors (and no, I’m not a physician or dentist), and I don’t regret it. However, sometimes I think “geesh!”

    • exit322 says:

      We don’t quite make enough to afford a small house (OK, maybe in Detroit or Cleveland)…but we are in that same boat. It’s done us a lot of good, my wife and I, but that’s a lot of money to owe.

  4. Lethe says:

    My father worked for one of the big oil companies from the 60s to the 80s, and one of his benefits was that tuition was covered for 4 years at any Canadian university or college for all of his children, provided we maintained a certain GPA. He wasn’t even that high up in the company- it was just standard across the board for most people who worked at the plant.

    You don’t see benefits like that anymore.

    • Dallas_shopper says:

      You’re lucky to see ANY benefits at all.

    • SBR249 says:

      I bet he also had a defined-benefit pensions and decent healthcare that doesn’t cost an arm and a leg in monthly premiums and have insanely high deductibles (oh wait, he’s in Canada…*insanely jealous*)….

    • Willow16 says:

      My husband works for a university and our children will go to there for almost nothing (we have to pay fees). The grumbling from the oldest about not having a choice was irritating but she has settled down. She will probably be the only one of her friends who will come out of college without any loans. I am also going to encourage her to get a job at the university when she graduates so she can get her master’s for free (you do have to pay income tax on graduate degrees).

  5. LabanDenter says:

    You guys fail at math.
    “nus of one-third of the national balance is held by people ages 30 to 39 and another third older than that, which means only a small part of graduates are able to dispense of their debt while still in their 20s”

    Small Part = ~33%.

    A Third.

    1 in 3 able to get rid of college debt before 30.

    But being honest would have prevented you from fueling populist anger.

    • Coffee says:

      Let’s do critical thinking:

      A third of people with the debt are over 30.
      A third are between 20 and 30.
      A third are less than 30.

      Where does it say anywhere that the third less than 30 years old will be able to discharge their debt before they’re 30? Demographics shift. The price of tuition increases. As the economy sputters, people rely more heavily on student loans to subsidize education. It is a gross oversimplification to look at the numbers as thirds and assume they exist in a vacuum.

      • StarfishDiva says:

        Not to mention the fact that more and more working adults are going back to school to complete unfinished degrees or pursue new ones to change career paths. Does this cover those people as well, or are we assuming that all student loans came from the 18-22 demographic? But, then again, DRTFA.

      • hansolo247 says:

        A third are between 20 and 30.
        A third are less than 30.

        If you’re going to scold someone on critical thinking skills, it’s best to be very diligent in your argument. Your 2 last groups overlap almost completely.

  6. bsgk says:

    Headline is forgetting the $14 trillion in outstanding mortgage debt.

    Either way, student debt is an indicator of a financial bubble that no one wants to address. Education loans are too cheap due to government subsidies, driving up demand for education, increasing prices for tuition, and in turn creating more student loan debt.

  7. vliam says:

    There has to be some manner of exerting a level of control over poor people who seek an education.

    • MutantMonkey says:

      I believe it’s called, “Vote Republican”

    • pop top says:

      Of course that’s the answer instead of something like “finding a way to lower tuition costs” or “removing the negative connotations or not having a college degree” or “investing more into trade or vocational schools”, you know, things that don’t make you sound like an asshole.

    • Nigerian prince looking for business partner says:

      “There has to be some manner of exerting a level of control over poor people who seek an education.”

      If higher education was affordable, I imagine our armed forces would shrink considerably. I doubt I would have joined the Army if I could have afforded college.

  8. lettucefactory says:

    Also keep in mind that parents sometimes take out student loans on their childrens’ behalf. This could explain some of the lingering debt in the significantly-over-30 portion of the crowd.

    Not that this is good news – people should not be taking on more debt as they head toward retirement. It’s not a sustainable system.

    • SBR249 says:

      Not disagreeing with you, but on most federally subsidized or guaranteed loans that college financial aid office give out, the parents are not involved. The student has reached the age of majority and the college guarantees that they are actually enrolled.

      On private loans, however, sometimes parents co-sign with students or may even just take it out by themselves. But as far as I know, a lot of student loans require the student being a party to it. Not sure how exactly that’s all calculated.

  9. ElleAnn says:

    I wonder what percentage of that is owed by students who went to for-profit colleges and got degrees that have little chance of resulting in a good-paying job.

    • whogots is "not computer knowledgeable" says:

      Point taken, but nearly all universities function as for-profit now.

  10. Cat says:

    Given the way the system is set up, does this surprise anyone?

    • Phil Keeps It Real [Consumerist] says:

      No, not what so ever ! We are not a society of ‘bigger picture thinkers’ more like a generation of the self !

      If you really want to see where we went wrong, look up a man by the name of Edward Louis Bernays & a documentary, ‘The Century of the Self’. One of the best UK based docs EVER!

      Like Cream said, ‘We’re Going Wrong’.

  11. lonestarbl says:

    People currently enrolled and up to about 35 years of age are the ones taking this on the chin… from my own interpretation, it appears many people in this generation of college students have gone to college just because that is “what you are suppose to do”.

    At the small Massachusetts College I attended, I could easily say that 30-50% of those enrolled had no business being in college. Whether it was complete lakc of know what they wanted to do, clearly never paid attention in any other learning atmosphere or were in college simply to reenact Animal House. The fact that so many people go to college and “hope they figure out what they want to do” has become a $50-$100k+ dice roll. In any other situation, if a person was confronted with “This is going to cost you a ton of money, so make the right choice”, the whoole process may be taken a little more seriously. The overall education system/structure is a mess and so many parents don’t understand what their kids are getting into until it is too late.

    So, to sum it up BAH! [/rant]

    • Bativac says:

      The only reason I went to college was because “that’s what you’re supposed to do” with a dash of “we never went to college but you are, by god” thrown in there. Of course, my parents didn’t help PAY for college, but by then, it had kind of been ingrained.

      And if not for college, I wouldn’t have this cushy cubicle job in the service industry, answering phone calls and waiting for the sweet embrace of death!

      • Phil Keeps It Real [Consumerist] says:

        That’s what I’m talking about Willis ! I never went to college, well I did attend a associates degree type place, for like 2 weeks, does that count ? & I have a decent little cubicle like careers I could possibly grow with.

        What really grinds my gears is how this country handles & treats education, it is like a last tier priority, we rather spend vast sums of money on wars & corporations, then empower the youth and general population through knowledge & education. Kind of makes sense though when you think of it… if a small group of people have governing this great land for a long time, & guiding the rest of the sheepish population who do what you tell them, then why would you want to interrupt that with the notion & idea of creating a better future & improving the system ? You would kick them (the leaders) out of their cushy lifestyle & means of life.

        I guess education shouldn’t be free, but there is no need to charge someone who is trying to better themselves, & maybe better society, 20k, 30k or 40k a year to do so.

        No rant here, just the truth from what I’ve seen or at least my honest opinion. & nothing is going to change about how things are run.

    • tbax929 says:

      Judging by your grammar, I suspect some of your fellow students would say the same about you. Did you even bother to take an English class in school?

      • tinmanx says:

        Ah yes, English class, those were days filled with rainbows and unicorns. We’re all human and we sometimes make typos, not every grammatical error is due to a poor educational background.

      • lonestarbl says:

        Blind rage of emotion for topics like this will often cause my brain to think far ahead of what my fingers can process. However, I do appreciate your asinine and non-contributing comment. I also have zero student loan debt, but have people close to me that are practically crippled by it.

  12. u1itn0w2day says:

    This is a perfect example of what happens when somebody else is paying for it. Sure there are alot of bad decisions by students but in the end it is the tution bill and the schools that helped this statistic along.

    • Kuri says:

      It doesn’t matter who pays for it, student debt is a big problem in this country.

    • Jevia says:

      The problem is that by and large, those students will be the ones paying for it, for the rest of their lives. That’s hundreds or maybe even a thousand or more dollars out of their pocket every month to pay for student loan debt rather than being used to “consume” other things, like buying stuff for our economy, using services to help the economy, being able to save up/afford a home to help the economy, etc.

      The more kids and adults have to pay for student loans, the less they will have to pay for other things that stimulate our economy, keep home values up, etc. What used to maybe be a small amount, a few hundred or so maybe, for 8-10 years (and many others used to be able to afford college simply by working while going to school), has now ballooned into many hundreds-thousands for 25-30 years.

      • Bsamm09 says:

        So when they initially took out the loans and spent the money, that didn’t pump money into the economy? Is this type of lending and spending occurring in a vacuum?

        • Matthew PK says:

          Public spending occurs only through private taxation. You can’t suggest that money wouldn’t otherwise have been spent, that’s a fallacy.
          Student loan debt is largely non-dischargeable…. so because the government backstops and encourages this debt they remove all borrower protections. There is significant moral hazard here and it’s destined for a major burst.

  13. sirwired says:

    The headline is untrue. Mortgage debt is far greater than any other kind of consumer debt. By over an order of magnitude. (3Q2011, outstanding 1-4 unit mortgage debt was $10.3 Trillion, according to the Federal Reserve.)

    • Matthew PK says:

      Headline *is* misleading, but secured versus unsecured is relevant to consider.

      • sirwired says:

        It’s not misleading, it’s wrong. Period. Neither the headline nor the article talked about secured vs. unsecured debt. (And, in any case, it referred to auto loans, which are secured. If they meant to make a distinction, auto loans would not have been mixed in with credit cards.)

  14. failurate says:

    I wonder how much of this is for profit schools milking the system by recruiting/enrolling people who have no real hope at ever completing a degree?

    • Matthew PK says:

      What makes you think that a for-profit education is inherently less valuable than a not-for-profit education?
      I guess you’ve never seen the tremendous commercialization of state schools via athletic programs or state budget allocations?

  15. Kaleey says:

    I’ll take that salute, MB, and thank you! (Paid it off last month – I’m 28.)

  16. Hirayuki says:

    I paid off about $20K in student loans by November the year I graduated. I was 21.

  17. tinmanx says:

    I write a $15k check every 6 months for my sister’s tuition. Hope she knows how lucky she is.

  18. Hungry Dog says:

    Sweet, gonna get a bachelors degree and no one will hire me as I am now overqualified for some jobs and don’t have 3-8 years experience in others. No junior level positions needed, only senior level.

  19. brinks says:

    College was such a big fat waste of time and money for me. I make less now than before I went back to school, and I can only defer my repayments for a couple more months.


    • tbax929 says:

      I make a lot more than I made before I went to college. However, I think that is mostly due to the amount of time I’ve been climbing the ladder in my industry. The problem I have with some of the young people I encounter is that they want to start at the top. I made about $20,000 a year in my first job, with the knowledge that as I gained experience I’d make more money. I don’t know that our youth has that kind of patience anymore.

      To be fair, I also don’t know if one can assume he/she will be able to stay in the same industry and climb the ladder. So that may have something to do with it.

      • brinks says:

        My issue is there are no higher positions that offer anything worthwhile to me in my current industry (that I’ve been in for almost 20 years). To start over in any other industry would leave me with an even smaller paycheck. I had a good job after years of horribly paying ones, but I lost it during the downturn, while I was back in school, and am pretty much back where I was when I started my career, as decent paying jobs have never been the norm in retail management (I just got lucky that one time).

  20. ARP says:

    We need to de-emphasize universities and start emphasizing trade schools, apprenticeships, and/or community colleges. The problem is that now many jobs require a 4 year degree even when its not necessary. So, we’re stuck in a cycle where jobs require 4 year degrees, so everyone gets one, perpetuating the need for 4 year degrees.

    • u1itn0w2day says:

      I think part of the problem is that alot of trade schools are in on the student loan action.

      I know alot of trade schools can fall in the 50k mark just for certificate or ‘degree’ from their school. They have financial aide offices and counselors too. And the only reason they have them is they know there is money to be had if the properly advise or ‘coach’ a student into how they are going to fund it. Same for the college industry.

    • Anonymously says:

      “Everyone” has as a Bachelor’s, so you need an MA as a minimum. Once those are overly common, you’ll need a PhD.

    • La Flama Blanca says:

      Completely agree. When I have to pay $60/hr for a good electrician + $90 just for him to show up, there is a severe shortage tradesmen.

  21. delicatedisarray says:

    I have been working this into every conversation I can today and I don’t even have to do any work to make it fit this topic- I paid off one of my loans yesterday!!

  22. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    That’s true for me – mine is a Parent Plus loan, at $7600 and shrinking slowly every month. Interest is 5.25%, which I think is way too high considering every single payment has been made early or on time. They did reduce the interest rate from 5.5% to 5.25% after 3 years of on time payments. Woo. I think I need to email AES and ask for another rate reduction.

    • bsgk says:

      Why do you think 5.25% is too high? Can you find other unsecured personal loans at a rate lower than 5.25%?

      My local credit union charges 9.5% for personal loans. I think you’re getting a bargain at that rate.

  23. nearly_blind says:

    The student loan problem is the same as the housing bubble 4-5 years ago. When you make easy money available to everyone for college without considering whether they can pay it back or not (analogous to bad mortgages) you drive up the price of college tuition (analogous to home prices) which in turn requires even more bad loans to be written to pay the higher prices. I’m not sure what the solution is, but making things easier for borrowers or offering a bailout is not going to help, it will only make the problem worse.

  24. energynotsaved says:

    The NY Times *had a very depressing study on the rise in the cost of tuition since 1985. While “All consumer goods” have increased just about 200%, tuition has increased by about 550%! They also include gasoline (300% increase) and medical care (350%).

    While our local community college is lovely, they do not offer next gen job skills. Yes, i might learn how to drive a big rig, or fix a car, but I’m not able to learn the skills to do the type of work that is needed to staff the next generation of factories.


  25. kella says:

    I’m lucky enough to be a professional software engineer without much real education. I entered college early but dropped out after a year and a half, so I started making a healthy salary at almost 19 with no debt. 5 years later I’m making double that, and I’m ahead of where I would be professionally with a bachelor’s degree (since I would have graduated less than 2 years ago).

    I’m not trying to brag, I’m trying to say that the value of education is dropping quickly while the price continues to rise. For software engineers, those fresh out of college are often low value because they don’t know how to build “real” software, and in many cases they’re missing basic skills. Universities seem to have turned into assembly lines, believing that everyone should fit within a strict set of rules, and that so long as they can pass some exams they’re fine. The reality is that there’s never a real evaluation of the quality of the student’s work, or of their ability to solve problems well. That’s why even just a couple of years of real experience working in the profession (a few months co-op doesn’t cut it, unless they offer you a job) is sometimes more valuable than a degree.

    I think our country is actually overvaluing education. Clearly we’re paying too much for it, and we infantilize young adults by keeping them institutionalized into their 20s.

    • vliam says:

      As someone with a degree in Computer Science, let me assure you that you made the correct decision. If you do decide to return at some point, I’d recommend supplementing your experience with a degree in Business Administration or some such bullshit.

      CS is a great field if you like interviewing for a new job every few months as your previous contracts wind down. Long-term prospects are bleak.

  26. AngryK9 says:

    This is true. I have a $300 monthly payment on a loan that I’ve been struggling to pay since 2001…and out of the original $30,000 loan, I somehow still owe $24,000…

  27. Extended-Warranty says:

    As much as I feel bad for people who have racked up this much debt, I cannot feel bad for people who have racked up this much debt.

    I mean seriously, how many of these people who have massive debt planned it out properly?

  28. kgb says:

    Getting loans and going to college to get a degree now is equivalent to paying $100k for a car with a 1 cylinder engine that only works part of the time. You mostly HAVE to have one, but it most likely won’t get you where you want to go.