At Extreme Investor Network, we are dedicated to helping our readers make informed decisions when it comes to their personal finances. Today, we want to discuss the rising trend of federal student loan borrowers carrying six-figure debts. According to new data from the U.S. Department of Education, the number of borrowers with federal student loan balances between $100,000 and $200,000 has increased significantly in recent years. In fact, in the second quarter of 2024, 2.4 million borrowers fell into this category, compared to 1.8 million in 2017. Additionally, 1 million people now have federal student loan balances exceeding $200,000, up from 600,000 individuals.
The reasons behind this trend are multifaceted, but one of the primary contributing factors is the rising cost of higher education. Betsy Mayotte, president of The Institute of Student Loan Advisors, highlights that the annual sticker prices for certain schools are nearing $100,000 when factoring in all expenses. This escalating cost has made it increasingly challenging for students to finance their education without accumulating significant debt.
Interestingly, it is graduate students who typically carry the largest federal student loan debts. Unlike undergraduate students, graduate students do not face the same borrowing limits and can borrow as much as needed to cover program costs. Consequently, graduate schools often set exorbitant prices for their programs, as they know students have access to unlimited federal loans.
For example, graduates of dental programs owed an average of around $307,000 in the 2019-2020 academic year, while veterinarians were in debt by approximately $170,000. These substantial debt burdens can have a profound impact on graduates, with nearly 80% of those owing between $130,000 and $139,000 reporting high levels of stress related to their debt.
Moreover, parents are not immune to the student debt crisis. Through Parent PLUS loans, parents can borrow unlimited amounts to finance their children’s education. The Century Foundation reported that annual Parent PLUS disbursements tripled between 2000 and 2016, reaching over $15 billion. This trend raises concerns about low-income and low-wealth parents risking their financial stability to provide college opportunities for their children.
At Extreme Investor Network, we understand the importance of managing debt responsibly and making informed financial decisions. Stay tuned for more expert insights and tips on navigating the complexities of personal finance.