Over the past 20 years, student loan debt has increased by 430%. (iStock )
The national debt has grown substantially over the past two decades, but never more so than in student loan debt, which has increased 430% since 2003. Kaplan Group ResearchAlthough student loan debt has stabilized in recent years, levels remain alarmingly high.
Overall debt has increased by 81.5% over that same period. Student loans have increased by far, with auto loans increasing by 91% in 20 years. Mortgages follow suit, increasing 80% since 2003. Credit card debt has also increased, but the increase was not as large as other debts, at 33%.
Some states have seen a bigger increase in debt than others. Washington DC has been hit the hardest by rising debt, with many residents reporting more than $100,000 in debt. Hawaii residents also have high debt levels, with many residents reporting an average debt of nearly $83,000.
The average debt for Washington state residents is similarly high at $82,000. The states with the lowest debt per capita are West Virginia, Mississippi and Arkansas.
Looking at individuals, mortgage debt remains the primary debt held by most households, typically accounting for three-quarters of a person’s or family’s debt. Following mortgages are student loans and auto loans, roughly equal in number.
If you have private student loans, the federal relief package doesn’t apply to you. If you’re looking to lower your monthly payments and ease the burden of student loan debt, consider refinancing your student loans through the online marketplace Credible.
Biden rule changes mean more student loan borrowers are getting relief through bankruptcy
Federal Court Blocks Remaining Part of Biden’s Student Loan Relief Plan
Since taking office, President Biden has implemented forgiveness and debt relief for student loan borrowers. Recently, he blocked every aspect of Biden’s SAVE plan.The plan was intended to reduce monthly payments for millions of borrowers and eventually offer full forgiveness after a certain number of payments.
“It wasn’t that long ago that one million borrowers fell behind on their student loan payments each year, primarily because they couldn’t afford to repay,” said U.S. Secretary of Education Miguel Cardona. It said in a statement“The SAVE Plan is a bold and urgently needed effort to repair the flaws in our student loan system and make higher education more affordable in this country. The Biden-Harris Administration remains committed to providing as much relief as possible to as many borrowers as possible.”
The 8th U.S. Circuit Court of Appeals formally granted an administrative injunction originally filed by a group of Republican-led states that would have barred the Biden administration from implementing parts of the SAVE plan that had not been blocked by other court decisions.
“Borrowers enrolled in the SAVE Plan will be placed in an interest-free grace period while my Administration continues to vigorously defend the SAVE Plan in court,” Cardona said. “The Department will provide regular updates to borrowers affected by these rulings over the coming days.”
If you’re considering refinancing to lower your monthly student loan payments, be sure to compare interest rates before applying to make sure you find the best deal for you. Credible can guide you through the refinancing process and help you find your best interest rate option.
Fewer than a third of Americans support Biden’s handling of student loan debt
How to reduce student loan debt
Aside from mortgages, student loans are one of the largest debts the average American has, so reducing these debts can be a huge financial help. A few steps Here are some steps borrowers can take to reduce their monthly student loan payments:
- Switch to a different repayment plan: There are many different repayment plan options available, so borrowers should consider alternative repayment plans that better suit their financial situation. Income-contingent repayment plans can reduce the burden by allowing you to adjust your monthly payments based on your income and the number of people in your family.
- Consider deferment or postponement: Payment deferments and forbearances offer relief if borrowers are experiencing financial hardship, job loss, or other significant life events. These options allow you to temporarily stop making payments or reduce your monthly payments. However, interest on the loan may still accrue.
- Consider exemption options: While the SAVE Plan is currently suspended for many loan repayers, there are other loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness, which forgive a borrower’s balance after they make a certain number of qualifying payments while working in certain public service jobs.
- ·Automatic withdrawals reduce interest rates: many Lenders offer interest rate discountsEnrolling in autopayments usually comes with a fee of 0.25%, which reduces the amount a borrower pays over the life of the loan.
- Refinancing or consolidation: Borrowers who are able to refinance their student loans at lower interest rates can save money on interest payments. Student loan marketplaces like Credible allow borrowers to compare student loan refinance rates from multiple private lenders at once.
Most student loan borrowers will struggle to pay back at some point: survey
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