March 23, 2015
A Snapshot of Student Loan Debt
A growing reliance on federal student loans to finance
Cumulative student loan debt of graduate and professional
increasingly costly postsecondary education expenses has
degree recipients has increased even more. (Estimates also
resulted in borrowers accumulating larger amounts of
include undergraduate debt.) In AY1995-1996, 44% of
student loan debt. By a number of metrics, the debt being
master’s degree recipients had federal student loan debt and
incurred by current borrowers is considerably larger than
owed an average cumulative total of $17,000; by AY2011-
amounts incurred by past cohorts. Many borrowers also are
2012, 59% had loans and the average cumulative amount
taking advantage of repayment flexibilities that allow them
owed had increased to $52,100. Among doctoral degree
to extend the period over which they repay their loans, but
recipients in research and scholarship fields (e.g., Ph.D.), in
which may lead to larger overall amounts paid due to
AY1995-1996, 30% had loan debt and the average
increased interest expenses. In aggregate terms, the federal
cumulative owed was $17,300; by AY2011-2012, 43% had
student loan portfolio has grown considerably in recent
loans and the average amount owed had increased to
years and the outstanding balance of federal student loans
$79,300. The debt of professional practice doctoral degree
now exceeds $1 trillion—more than a tenfold increase over
recipients (e.g., M.D., J.D.) increased the most starkly. In
the outstanding balance two decades ago.
AY1996-1996, 74% had loans and owed an average of
$46,600; by AY2011-2012, 78% had debt and owed an
Total Student Loan Debt, by Type of
average cumulative total of $133,300.
Degree Completed
How Student Loans Are Repaid
Department of Education data show that for students
completing degrees of all types, both the percentage with
Federal student loans are characterized by myriad ways in
federal loan debt and the average cumulative amounts owed
which repayment may be structured and temporarily
steadily increased over the past two decades (Figure 1).
delayed. Borrowers may select from among several
different loan repayment plans. They also may extend the
Figure 1. Average Cumulative Amount Owed on
repayment term of their loans by including them in a
Federal Student Loans, by Type of Degree Completed
Consolidation Loan. Additional flexibilities include
(Thousands of dol ars, AY1995-1996 through AY2011-2012)
deferment and forbearance, which allow borrowers to
temporarily delay making payments on their loans. Use of
1995-1996
these flexibilities, however, may delay or slow the rate of
Associate's degree
repayment and may ultimately increase the total amount of
1999-2000
interest borrowers pay on their loans.
Bachelor's degree
2003-2004
2007-2008
Repayment Plans
Master's degree
2011-2012
Unless a borrower chooses otherwise, student loans are
Doctoral degree -
repaid according to a standard repayment plan, with equal
recearch/scholarship
monthly installments paid over a period of not more than 10
Doctoral degree-
years. Increasingly, borrowers are using the income-driven
professional practice
repayment plans (income-based repayment (IBR), income-
contingent repayment (ICR), and Pay-As-You-Earn
0
25
50
75
100 125 150
(PAYE)) in which payment amounts are capped at a portion
Th
d
Source: U.S. Department of Education, National Postsecondary
of discretionary income and adjusted annually, and in
Student Aid Studies (NPSAS): 1996, 2000, 2004, 2008, and 2012.
which the repayment period may be extended up to 20 or 25
years. Under the income-driven plans, any loan balance that
Note: Nominal dollars.
a borrower has been unable to pay by the end of the
For undergraduate students, average cumulative federal
specified repayment term is discharged.
student loan debt at degree completion more than doubled
between award year (AY) 1995-1996 and AY2011-2012. In
Other available repayment plans include graduated
AY1995-1996, 26% of associate degree recipients had
repayment, in which borrowers’ monthly payment amounts
loans and owed an average cumulative total of $6,200; by
gradually increase over the course of the repayment period;
AY2011-2012, 42% had loans and owed an average of
extended repayment, in which borrowers with total loan
$16,300. Among bachelor degree recipients, in AY1995-
balances that exceed $30,000 may make lower monthly
1996, 49% had loans and owed an average of $11,900; by
payments over a longer repayment period; and alternative
AY2011-2012, 62% had loans and owed an average of
repayment plans, which may be made available to
$26,200.
borrowers who demonstrate they are unable to repay
according to the other plans.
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A Snapshot of Student Loan Debt
Loan Consolidation

Borrowers may simplify the repayment of their federal
Figure 2. Cumulative Outstanding Direct and
student loans by including them in a new Consolidation
Guaranteed Student Loans
Loan. Through loan consolidation, borrowers begin a new
(Bil ions of dol ars, FY1994 to FY2016 est.)
repayment term that—depending on the loan balance—may
be for a period of up to 30 years. This may reduce the
1,200
monthly payment amount, but may lead to an increase in
1,000
the total amount of interest paid. Consolidation Loans
comprise 35% of the federal student loan portfolio.
800
600
Effects of Interest Accrual During Periods When
No or Reduced Payments Are Made
400
200
Borrowers are relieved of making payments on their loans
during certain periods, such as while they are in school,
0
during a six-month post-enrollment grace period, while in
deferment, or when granted forbearance.

For most loans (except need-based Subsidized Loans)
Source: Budget of the United States Government, Fiscal Year 2016
interest begins accruing when a loan is disbursed and
(and prior years), Appendix for the Department of Education.
continues to accrue even during periods of delayed or
deferred repayment. While borrowers may delay paying the
Policy Issues
interest that accrues during these periods, it is eventually
capitalized (i.e., added to the principal balance). Due to the
Congress may consider the following policy issues in the
accrual and capitalization of unpaid interest following
context of reauthorization of the Higher Education Act of
periods of delayed repayment, many borrowers begin
1965, which authorizes the federal student loan programs.
repayment on their loans owing hundreds or thousands of
dollars more than they initially borrowed.
Loan availability. Should new constraints be established to
limit how much student loan debt individuals may incur or
The income-driven repayment plans permit borrowers to
the extent to which postsecondary education expenses may
repay their loans over a period that may exceed 10 years.
be financed with federal student loans?
Additionally, those borrowers with substantial debt relative
to their incomes may qualify to make monthly payments of
Loan repayment terms. What are the long-term benefits
less than even the interest that accrues on their loans. If this
and costs to borrowers and society of existing loan
occurs, the unpaid interest continues to accrue and
repayment flexibilities such as allowing borrowers to
eventually may be capitalized into the principal balance of
spread the repayment of their loans over an extended period
the loan, increasing the total amount owed.
of time or to make reduced monthly payments, but which
lead to increased interest expenses?
Student Loan Debt in the Aggregate
Debt and societal well-being. To what extent does federal
The federal student loan portfolio has been steadily
student loan debt affect borrowers’ opportunities and
increasing due to factors that include growth in the overall
choices concerning careers, family formation, home
number of borrowers, individuals borrowing larger amounts
ownership, and wealth accumulation?
to finance their education expenses, and the availability and
use of options to delay or extend loan repayment. More
Sustainability of the federal loan portfolio. Although
than 41 million individuals—one in six adult Americans—
most loans are repaid and defaulted student loans are in
currently have federal student loan debt. Since 2010,
many cases rehabilitated or collected on, consideration may
student loans have been the nation’s second largest source
be given to the rate at which the federal loan portfolio will
of consumer debt, exceeded only by mortgage debt.
grow over the long term and to the proportion of loans that
will ultimately be repaid in full.
During the period from FY1994 through FY2003, the total
volume of student loans outstanding increased from less
For more information, see CRS Report R40122, Federal
than $100 billion to nearly $300 billion (Figure 2). During
Student Loans Made Under the Federal Family Education
this period, federal student loans were disbursed at a rate
Loan Program and the William D. Ford Federal Direct
that remained under $50 billion per year. From FY2004 to
Loan Program: Terms and Conditions for Borrowers, by
FY2010, annual disbursements gradually increased from
David P. Smole.
$50 billion to $100 billion, and since FY2010,
David P. Smole, dsmole@crs.loc.gov, 7-0624
disbursements have remained slightly above $100 billion
per year. The total volume of federal student loans

outstanding surpassed $500 billion in FY2008, and
IF10158
exceeded $1 trillion in FY2014.
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