Some of the most common types of debt – mortgages, car loans, and credit card balances – are usually forms of debt necessary for everyday life, from covering household purchases and building good credit to achieving the American Dream home. ownership.
In the US, pursuing higher education also often means adding another burden of debt.
Since The Great Recession, rising tuition at US universities has contributed to student loans growing at an unseen rate with other forms of personal debt.
In June 2022, the average student loan debt among consumers in the US totaled $39,381, according to Experian. In 2012, the student loan debt of all US consumers exceeded that $1 trillion sign for the first time, and it continues to climb since.
To better understand how student loan debt has grown over time, Experian compiled data collected from student loan holders from all over the country and government data dating back to 2009. The average loan balance used in the analysis represents the average debt among all student loan borrowers.
Historical data shows how average student loan debt balances have grown faster than inflation. In fact, student debt has also grown to the same extent as credit card and auto loan balances combined.
Student loan debt is the largest form of debt after mortgages
As of Q2 2021, the average student loan debt balance has increased nearly 92% since 2009, according to Experian data. Average student loan debt saw its biggest year-over-year increase from the summer of 2012 to the summer of 2013 when they jumped nearly 10%.
For Americans carrying student loan debt, the average is nearly $40,000 — second only to home mortgages when it comes to the average consumer’s debt balance.
Student loan debt growth is higher than inflation
According to the US Bureau of Labor Statistics (BLS), the annual national inflation rate in the US hovered around 2% – and often fell below 2% – during the decade leading up to the COVID-19 pandemic. In 2021, the first calendar year of the pandemic, the inflation rate rises to 7%.
Since the summer of 2012, the average student loan balance has grown even faster. During the three-year period prior to 2012, the average student loan balance increased by under $2,000. Since 2012, student debt has risen steadily at a faster rate than income.
Student loan debt exceeds income
Median household income in the US fell in the years following the 2008 financial crisis, then saw modest annual growth from 2015 to 2020, according to the US Census Bureau.
Comparatively, the average student loan debt balance has grown at more than twice the level of median household income since 2009.
By 2020, the median household income had increased from $49,777 to $67,521, or about 36%, not adjusting for inflation. Between 2009 and June 2022, the average student loan balance held by US consumers increased by about 92%, from $20,560 to $39,381.
Rising tuition costs add to the financial strain
For at least a decade, college tuition has become more expensive, according to data from the BLS and the U.S. Department of Education.
The average rate of increase in student loan debt balances in the US has actually slowed from 2020 to 2021, according to Experian data. This is mostly due to a national drop in college enrollment during the COVID-19 pandemic, which reduced the number of people taking out new loans.
The CARES LAW, passed in March 2020, also affects loan balances while setting the emergency relief interest rate for federal student loans at 0%. The law also allows employers to make up to $5,250 tax free annual payments to their employee’s student loans, which may have an effect.
On August 24, 2022, the Biden administration announced student debt relief plan to cancel $10,000 in student debt for individuals making less than $125,000 a year, or $250,000 for married couples. Pell Grant recipients will receive $20,000 in loan forgiveness. For all borrowers, the pause in federal loan payments has been extended for more than two years now, with a deadline of December 31, 2022.
This story originally appeared on Experian and was produced and distributed in partnership with Stacker Studio.