Challenges are ahead for many student loan borrowers who will begin repaying loans on top of their usual expenses this month. After three and a half years of the federal student loan payment pause, an estimated 44 million federal student loan borrowers are expected to resume payments.  

Borrowers in the U.S. had hoped for student loan forgiveness at some level as part of the now-dead, $400 billion forgiveness plan announced in August 2022.  

Due dates will differ for borrowers, but most will see their payments resume sometime this month. 

How much student debt do Americans owe?

The student loan debt balance in the U.S. has increased by 66% over the past decade, totaling more than $1.77 trillion, according to the Federal Reserve. The most recent data available from the 2020-2021 school year shows that more than half of bachelor’s degree students who attended public and private four-year schools graduated with student loans. These students left school with an average balance of $29,100 in education debt, according to the College Board.

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More than a quarter of Americans with student debt owed $10,000 or less. Under Biden's student debt relief plan, nearly 20 million borrowers would have their debts zeroed out.

The Supreme Court ruled against the Biden administration's debt forgiveness plan in late June, ending a program that was intended to erase $400 billion in student loans and ease the financial burden on families.

Who owes the most student debt?

According to the Federal Reserve of St. Louis, Black Americans had a larger amount of student debt owed on average compared to white Americans. But looking within gender and race differences, Black women and white women had more student debt on average compared to Black men and white men.

The gaps in student debt owed by race and gender grows over time. Black women pay off their debt more slowly than white women and Black men, according to the findings.

Disparities in student debt owed

Research from the Federal Reserve Bank of St. Louis attributed the gender wage gap—female-dominated occupations paying lower wages—as one reason why women have higher student debt levels. The research also found that gender discrimination in the labor market and lower rates of families saving college funds for daughters contribute to gender disparities in student loans owed.

Black adults experience racial wage gaps and encounter racial discrimination in the labor market, leading to disparities in levels of student debt owed compared with white counterparts. Racial wealth gaps are also one cause for Black families having less college savings available on average compared to white families.

Who is behind on their student loan payments?

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and other executive orders helped relieve student borrowers of paying back loans throughout 2021, dramatically reducing the share of borrowers who were behind on their payments, according to Federal Reserve data. Among adults with student debt, 12% were behind on their payments in 2021, compared to 17% behind in fall of 2019.

The Federal Reserve found that borrowers with less education and less educated parents were more likely to be behind on their payments, along with those attending private for-profit colleges and universities.

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