Student debt has become something of a crisis, accounting for up to $1.57 trillion in the United States alone. It’s not just that it’s grown out of control, but that it’s harder and harder for students to pay back—many graduates just can’t find a job after college fast enough to pay down the debt in time.
Here’s what the average debt after college looks like according to multiple sources, plus what you can do about it.
What’s the average student debt after college?
There are plenty of estimates out there from plenty of credible sources, but they all fall within a range of about $30,000 – $40,000 for the average student.
Here are what various sources say:
- Student Loan Hero: $28,800 (2019)
- CNBC via College Board: $29,000
- Investopedia: $37,584 (per borrower—not counting debt-free grads)
- Educationdata.org: $39,351 (per borrower—not counting debt-free grads)
Some fortunate people will be able to graduate debt-free, and that’s a good thing. If you’re taking out a student loan, however, then it could become a heavy financial burden—especially on top of other forms of debt, like car loans and mortgages. You’ll need a plan to pay it all back without interest rates increasing your debt too much (which we’ll cover below).
What’s the average debt after college, in total?
According to the Federal Reserve, the average household debt for Americans under 35 was $44,980 as of 2019 (the most recent year in the Survey of Consumer Finances). Here’s how that debt has grown for recent graduates and young professionals since 1989.
That’s helpful to know, but the Federal Reserve’s report has some limitations:
- It reports on household debt, not individual debt.
- Young graduates are grouped into a large age group of “under 35,” which isn’t too specific.
Experian produced a more granular report in 2020 that examines individual consumer debt by age.
Here is the average debt after college by age group in 2020:
- Gen Z (18-23): $16,043
- Millennial (24-39): $87,448
- Gen X (40-55): $140,643
- Baby Boomer: (56-74): $97,290
- Silent Generation (75+): $41,281
These are still averages by age group, but it’s a more precise snapshot of what your average debt will look like after college. You can see that Gen Z has started to accrue a modest amount of debt, but Millennial debt gets much, much higher at $87,448 on average. Auto loans, mortgages, and student loan debt will do that.
Student loan debt is significant, but it isn’t the only kind of debt that people accrue after college. There’s also mortgage debt, auto loan debt, credit card debt, and personal lines of credit (for emergencies).
Understanding the average debt after college through personal financial theory
This isn’t just about how each generation handles its money, either—this data is consistent with the theory of increasing and decreasing financial responsibility that most people experience throughout life.
It follows these steps:
- Young people don’t have much debt because they don’t have much responsibility compared to older generations, and they can’t buy much because the average salary after college is relatively low. It’s usually limited to student loan and car loan debt.
- Debt rises commensurately with life responsibilities as we approach middle age, such as buying homes (or condos, these days), having children, and buying things like appliances.
- Debt peaks in middle-late life when you’re part way through paying your mortgage, children’s college tuition, pets and vacations, and home renovations.
- Debt decreases later in life. Mortgages become paid off, children’s college tuition gets paid off, and children move out. This is where retired couples often think about downsizing their homes.
How much debt will I have after college?
How much debt you’ll have after college relies on entirely personal factors, but there is some data that can give you an idea of how much you might have.
According to the various sources we examined above, your student debt will probably sit between $20,000 and $50,000. Finding a more accurate answer means evaluating your personal circumstances, though.
Consider these factors and if they apply to you:
- If your tuition is covered in part by a parent or guardian.
- How much you can pay up front.
- Your ability to pay down debt throughout college.
- If you live on campus, off-campus, or even at home.
- Income streams in college through part-time work.
- Your living costs after graduation.
- How quickly you get a job after college.
- Your salary after college.
It’s also worth mentioning that you student loan repayment plays provide a 6-month grace period to find a job before interest starts to accumulate on your debt. With that in mind it’s probably best not to take a gap year after college if your debt is high.
How do you pay off student debt after college?
The good news is that graduating with a bachelor’s degree gives you a key advantage in paying down debt, and that’s raw earning power. Look at these average lifetime earnings by education level in the United States below.
Notice that bachelor’s degree holders are set to earn more than $2,000,000 in total income, while high school graduates, who hover at a little over $1,000,000 in total earnings—a clear sign that college is worth it. Graduate degree holders make close to $3,400,000 in lifetime earnings, too, for reference.
Rest assured that with effort, patience, and a strategy, you will find a job to pay back that debt.
Get started with your job search sooner than later, though. It takes new graduates an average of 7.4 months to find a new job compared to established professionals, who only take about 4 months.
You may need to take a survival job to pay your bills. Even better: if you commit to living at home after college then you can put almost all of your take-home pay toward paying down your student loan, paying it off in a few years instead of getting stuck paying more interest for 15 years. This is an ideal strategy if you’re carrying more than the average debt after college.
This is a chart comparing how quickly I saved up enough to pay off a $40,000 student loan after graduating from college, even with 9 months of unemployment. The principal amount gets paid off much, much faster when you save aggressively, not to mention cutting down interest that can be charged as well.
Paying off your student loans in 5 years is very, very achievable if you follow this basic strategy. I wasn’t even able to move home after grad school either. I would have saved up even more cash if my first job had been near my parents’ home.
How much can you expect to make right after college, though?
Look at this bar chart comparing the earning power of graduates from the liberal arts, STEM, and professional programs. You can see that liberal arts graduates don’t make particularly good money right after graduation, but—living at home with minimal costs—that average income of about $25,000 USD could go a long way toward paying down your student debt.
You may not be able to move home and you might not be able to find a “good” job right away. That’s okay. It’s a process—but starting that process now will lead to a lower student debt sooner.
Other than that, you must learn how to find a job after college. Nothing can pay down your debts better than a steady income stream—most likely a salary. Don’t worry about founding some hip company right out of school; focus on gainful employment before drinking the entrepreneurial kool-aid.
Happy hunting, folks!