By 2020 Americans owed roughly $1.6 trillion in student loans, according to Federal Reserve data, making student debt the largest category of household debt after mortgages. More than 40 million people held federal student loans.
How it got so large
- Rising tuition. Published prices at public and private colleges rose much faster than inflation for decades, while state funding per student fell in many states.
- More students borrowing. Enrolment grew, and a larger share of students borrowed, including for graduate degrees, where borrowing limits are higher.
- Interest. Unpaid interest on loans in deferment or forbearance added to balances.
- Federal lending. Since 2010 almost all new federal student loans have been made directly by the government, which makes the Education Department one of the largest lenders in the country.
Who holds the debt
Borrowers with the largest balances are often graduate students, including future doctors and lawyers, who tend to have higher incomes. But default rates are often highest among borrowers with small balances who did not finish their degrees. Black borrowers, on average, owe more four years after graduation than white borrowers, partly because of differences in family wealth.
The 2020 pause
The CARES Act, passed in March 2020, suspended payments and set interest to zero on most federally held loans, and stopped collections on defaulted loans. The pause was extended several times and finally ended in 2023, when payments resumed after more than three years.
What changed afterwards
The Supreme Court struck down the Biden administration's plan for broad cancellation in 2023 (our explainer). Targeted forgiveness through Public Service Loan Forgiveness and income-driven repayment continued, and Congress revised repayment options and borrowing limits in 2025. Total balances have remained around the same order of magnitude, though the exact figure changes every quarter.
Where to find current numbers
The Federal Reserve Bank of New York publishes a quarterly report on household debt, and Federal Student Aid publishes data on its loan portfolio.
Sources
General information about the law as it stood when this page was updated, not financial, tax or legal advice. Rules and limits change; check the official source or a qualified adviser before acting.