The characterization of student loans as “good debt” is increasingly being questioned as college costs have escalated dramatically and federal lending policies have shifted. The outstanding federal student loan debt now stands at $1.7 trillion across more than 42 million borrowers, a significant increase from $516 billion and 28 million borrowers two decades earlier. According to a Pew Research Center study published in 2025, nearly 8 in 10 adults rate colleges and universities as doing only a fair or poor job maintaining affordable tuition, while 55% gave similarly low marks for preparing students for well-paying jobs. Recent survey data from NerdWallet indicated that nearly 80% of Americans view the federal student loan system as broken.
Tuition costs have risen substantially over the past several decades, with the average annual cost at private four-year colleges reaching $45,000 by 2025-2026, compared to $14,550 in the 1971-72 academic year when adjusted for inflation. Including room and board, the annual expense at a private institution now averages $60,920, with some institutions exceeding $100,000 annually. Tuition has increased approximately 5.5% per year on average since 1983, outpacing both inflation and wage growth. The average borrower now carries $40,768 in student loan debt, up from $30,414 a decade prior, while the number of borrowers owing more than $100,000 has grown from 2.4 million to 3.8 million over the past decade.
Repayment timelines have extended significantly, with the average balance for highly indebted borrowers reaching approximately $187,000 in 2026, compared to $172,000 in 2017. Nearly 10 million people over age 50 now carry student debt, compared to around 7 million in 2017. The Trump administration’s recent legislation, the “one big beautiful bill” act, eliminated several affordable repayment plans and removed protections such as payment pause options during unemployment, while extending the standard repayment timeline to 30 years. Default rates have risen substantially, with approximately 9.3 million federal borrowers in default as of June 30, a 50% increase from 6.2 million a decade earlier.
Experts note that extended repayment periods introduce additional risks, including job loss, illness, or administrative errors that could derail borrowers. As opportunities in certain sectors, particularly technology, have contracted due to artificial intelligence disruption, prospective students face heightened uncertainty about whether the investment in higher education will yield adequate financial returns, making the decision more complicated than in previous generations.
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