The traditional view of student loans as beneficial debt has come under increasing scrutiny as educational costs have risen sharply and circumstances for borrowers have shifted. The outstanding federal education debt now totals more than $1.7 trillion distributed across more than 42 million borrowers, a substantial increase from $516 billion held by 28 million borrowers two decades earlier.
Tuition and fees at private four-year institutions have climbed dramatically over recent decades. In the 1971-72 academic year, average annual tuition and fees at private colleges reached $14,550 when adjusted for inflation. By 2025-2026, this figure had surged to $45,000 annually, with total costs including room and board averaging $60,920. Some institutions now charge more than $100,000 per year when all expenses are included. This growth has substantially outpaced inflation and wage increases, rising approximately 5.5 percent annually on average since 1983.
As costs have escalated, borrowers have accumulated larger debt balances. The average student loan balance now stands at $40,768, up from $30,414 a decade ago. The number of borrowers carrying more than $100,000 in debt has grown from 2.4 million to 3.8 million over the past 10 years, with average balances among this group rising to approximately $187,000. Extended repayment timelines compound these challenges, particularly as older borrowers face longer repayment periods. The population of borrowers over age 50 with student debt has increased to nearly 10 million from approximately 7 million in 2017.
Recent policy changes have created additional concerns for borrowers. The federal government’s recent overhaul eliminated several affordable repayment options and reduced safety nets, including the ability to pause payments during unemployment. The new Repayment Assistance Plan extends terms to 30 years, compared to the 20 to 25-year plans previously available. Default rates have also risen, with approximately 9.3 million borrowers in default as of June 30, representing roughly a 50 percent increase from the 6.2 million borrowers in default a decade earlier.
Public confidence in higher education’s value has declined notably, with surveys indicating that nearly 80 percent of Americans believe the federal student loan system is broken. Many economists and policy experts now argue that excessive debt levels undermine the investment thesis for college education, particularly when extended repayment periods constrain opportunities for wealth-building through home ownership and retirement savings for extended periods.
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