Student Debt, by the Numbers

Student debt has increased significantly since the 1980s due to higher tuition rates, decreases in federal aid and a growing dependence on credit cards.


| July/August 2012


What’s an education worth? The financial crisis has put a heavy burden on all Americans, but students are feeling the pinch in a number of unique ways. Here are some numbers that lay behind the political firestorm.

Since the early 1980s, average tuition has gone up 439 percent, the combined result of lower state funding and a large “echo boom” of young people entering school. About 37 million Americans hold student debt—just over 1 in 10.

That’s a big increase. A generation ago, students were a lot less likely to take out loans. During the 1980-1981 school year, an average student paid just over $2,000 each year for tuition, room and board at a public, four-year school. By 2009, the average was about seven times that.

Federal aid has also dwindled. In 1980, most federal aid to students was in the form of grants, and on average, a Pell grant could cover about two thirds of tuition. These days a maximum Pell grant covers about half that, and Washington invests much more in issuing loans.

Now, the average student debt load is reportedly just over $25,000, but that’s a little misleading. In addition to loans, students are increasingly turning to credit cards to cover rent, food, and other living expenses. An average student has 4.6 credit cards, and the average debt load for a senior is more than $4,000.  What’s more, banking on campus is big business. At least 700 colleges and alumni associations have contracts with banks to market credit cards to their students. About 9 in 10 students use credit cards to pay education expenses. 

But wait, here’s the scary part. Unlike most borrowers, students are mostly ineligible for bankruptcy protection. In order to enter bankruptcy, student borrowers have to successfully file a lawsuit against their creditors and prove that repayment would cause them “undue hardship.” So it doesn’t happen that often.