The highest student loan balances are incurred by Millennial and Gen X borrowers
Student loans, like other major debts can be a part of a borrower’s life for a substantial portion. Loan debt can also affect some people more than others. There are notable differences in the severity of loan debt depending on race, gender, age, and other factors.
If you examine student loan debt by age, there are two factors that can cause discrepancies: the tuition rates in force at the time each cohort attended college and whether older cohorts borrowed or co-signed for additional debt. Interest rates can also increase loan balances as participants pay them off.
Student loans can’t be self-amortized so borrowers don’t have a fixed repayment schedule. This is to make sure that the debt is paid off within the agreed upon term. Student debt can lead to financial hardships when it accumulates. However, how keenly someone feels about it will depend on their age and life stage.
Understanding Student Loan Debt
The amount of student debt an individual owes when he or she has secured financing from the federal government, private lenders, or both. This money can be used to pay tuition and for school supplies. It also covers basic living expenses. At $1.22 billion, as of March 2022. The total student loan debt owed by Americans was more than any country’s gross domestic product (GDP) as of March 2022. People who are unable to pay their debts on time will see their 1000 dollar loan become delinquent. After a certain amount of time has passed without payment, this can lead to debt default.
Lending to a borrower that isn’t paid back in full can have a significant negative impact on their credit score and credit report. It can be difficult to save money for major purchases or emergencies if you don’t pay your loan on time.
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Age and student loan debt
Due to the fact that higher education costs have risen and that interest rates and payments can fluctuate over time, borrowers will owe different amounts depending upon their age.
These are the most popular age groups that will serve as the “baseline”, for this article. Sources using different age ranges will have their data presented as reported. Data may also be sourced from other years, since many of these studies don’t get updated every year. Here are the results of our research regarding student loan debt by year.
- 24 and younger Generation Z (nine-24).
- 25-34: The majority of the millennial generation
- 35-49: Millennials (35-40); Generation X (411-49)
- 50-61: Generation X (50-60); baby boomers (51-61)
- 62 years and older: Baby boomers (62-75); silent generation (76-93)
What makes student loan debt different from other debt?
Student loan debt is different than other types of borrowing in that it can have a multigenerational effect. It can have a negative impact on your safety net in the future if your parents borrow money from their retirement to pay college costs or student loan debt. Student loans are also unsecured debt. You cannot recoup student loans, unlike a mortgage where your home is collateral.
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Students will most likely need to borrow money to pay for college. There may not be enough parental financial aid or scholarships to cover all costs. Due to the rising cost of education, it is likely that student loans will continue to increase in the future.
The size of student loan debt by age
First, we need to know the exact size of each group’s total debt. It is functionally impossible for each citizen to see the amount of their brattleboro savings and loan. There are two methods we can analyze these data.
The average student loan debt per age group gives us a rough idea of which generations have the greatest debt burdens. The total student loan debt for each generation gives us a better idea of who has taken on the greatest student loan debt.
Average Student Loan Debt by Age Group
According to data from the Federal Student Aid, the average student loan debt for 50-to-61 year-olds was $44,312, which is the highest in the fourth quarter of 2021. Close behind was the 35- to 49-year-old group, with an average of $43,210. At $14,430, the average student loan debt of the 24-and-younger cohort was the lowest at $14,430. This is not surprising, considering that most borrowers in this age group haven’t had time to save interest or complete graduate school.
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Total Federal Student Loan Debt By Age Group
The total student loan debt per age is $622. The largest amount owed by borrowers aged 35-49 was $622. The 25-to 34 demographic owed $500, the second highest amount. During the same time period, there were approximately $97 billion. The total student loan debt is $97. The 62-and older group has the lowest student loan debt at $97.
Who has the least amount of debt?
Federal Student Aid reports that borrowers aged 24-and-younger have less student loan debt than in 2017, but this is only true for 2021. This could be due to a drop in college enrollments from 2020, which has been caused by the COVID-19 pandemic. These numbers are not unusual when compared with the same quarter last year, which saw a decrease of nearly eight billion between Q2 2020 and Q3 2020.
Other groups have seen their total debt burdens increase at different rates. The total student loan debt of 62-year-old borrowers has increased $45. Since Q2 2017, the total student loan debt owed by 62-and-older borrowers has increased by $45. This could result from the oldest borrowers having either returned to school to improve their career prospects or taken out loans to support their children/grandchildren’s education(s).
Even though they owe more per borrower than their 25- to 34-year-old counterparts, the $22. The increase was $22. These numbers are much lower than $137. Over the past three years, there has been a $1.5 trillion increase in total borrowing by 35-to 49-year-olds.
Student debt can be problematic when older generations are responsible for paying school debt, and paying for college for their children.
Students Loan Debt by State and Age
Due to differences in education costs and other expenses, student loan debt per age varies between the states. This is evident in both the number of borrowers in a state and the total amount owed for each age group.
Students Loan Debt by State and Age
Number of borrowers in the thousands. The amount borrowed is in the billions.
California has the highest student loan debt, according to Federal Student Aid. This is as of 2021.
- Total Borrowers: 3.3 Million
- 24 or Younger (Total): $8.1 billion
- Total: 49%. 25-34 (Total) $49.
- 35-49 (Total): $53. billion
- $50 to 61 (Total: $23.6 billion)
- $8.3 Billion for 62-year-olds and older (Total)
- Wyoming, however, has the lowest values for almost every category.
- Total Borrowers: 54.000
- 24 or Younger (Total): $0.9 billion
- 25-34 (Total): $0. Million
- 35-49 (Total): $0.4 Billion
- 50-61 (Total): $0.8 Billion10
How age affects student loan debt
These differences reveal how Americans deal with student loan debt throughout their lives. First, they have to pay off their debt, then it can be passed on to their children, grandchildren, or other family members. These statistics show that borrowers between 50 and 61 years old are most affected by high student loans. Close behind is the 35- to 49-year-old group.
It is important to keep in mind that correlation does not necessarily mean causation and that the Fed’s data may not tell the entire story. The following factors, in addition to age, are crucial to understand student loan debt balances based on age:
Number of Borrowers. The total student loan debt of a group will be affected by the number of borrowers within that age range. This data can also be used to calculate the student loan debt per capita for a group.
Generational Wealth: Borrowers who have greater access to their generational wealth will be able to pay down student loans faster without having to sacrifice their ability to save for important purchases.
Delinquency or default: Debtors who are unable to repay their debts will see their balances increase over time. Their credit score will have a negative impact on their financial ability.