Rising Student Loan Debt: Impact on Borrowers and Society

The latest figures on student loan debt show a substantial increase in six-figure balances. The financial impact to borrowers is both short and long term.

Key Points:

• Student loan debt continues to increase dramatically.
• The number of borrowers with six-figure balances has significantly increased since 2017.
• Over 2.4 million borrowers now owe between $100,000 and $200,000.
• More than 1 million borrowers owe over $200,000.
• Rising education costs contribute to the problem.
• The politics behind this issue won’t be resolved anytime soon.

In the second quarter of 2024, more than 2.4 million borrowers had a balance on their student loans between $100,000 and $200,000. Dating back to 2017, that is an increase of 1.8 million student loan borrowers based on new data by the U.S. Department of Education.

There are more than 1 million student loan borrowers who owe more than $200,000. That’s an increase of 600,000 more borrowers.

Of course, education expenses continue to grow. This is an issue I’ve discussed in my bankruptcy law courses with my students. For example, the average student loan balance for dental students is $307,000. Student loan borrowers in dental school have the highest balances on their accounts.

Politics and Student Loan Debt Relief Do Not Mix

Of course, this issue is compounded by the fact that student loan debt has become a political issue versus a financial one. I’ve discussed this in a prior blog where I referenced the Republican-led states filing lawsuits against the Biden administration and the U.S. Department of Education to prevent student loan forgiveness.

Does this help those states financially? No. If you don’t have to pay back x amount in debt, that frees up money whether to make an immediate purchase or save for retirement. The fact is, you can never save enough for retirement. A prior blog post focused on the issue of student loan debt for those aged fifty-five plus.

Whether the extra funds are spent on dining out or buying a new car, or home, the state benefits as that increases the tax revenue. The more taxes received at the local and state levels, the more money is available to fix roads and bridges, hire more police, and increase teachers’ pay. You don’t have to be an economist to figure that one out.

Does it help those politicians politically? Time will tell.

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