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What Percentage Of America Is Debt-free

Average Student Loan Debt

The U.S. National Debt Is Enormous. Is That Bad?

Sixty-two percent of the class of 2019 graduated with student debt, according to the most recent data available from The Institute for College Access & Success, a nonprofit organization that works to improve higher education access and affordability

The average U.S. household with student debt owes $58, 957, according to NerdWallets 2021 household debt study.

Here’s what average student loan debt by type:

Debt type

$19,928: Associate Degree Nursing

$23,711: Bachelor of Science in Nursing

$47,321: Master of Science in Nursing



1. 2019 The Institute for College Access and Success2. 2015-16 National Center for Education Statistics3. 2017-18 Urban Institute4. 2015-16 National Center for Education Statistics5. 2015-16 National Center for Education Statistics6. 2019 Association of American Medical Colleges7. 2019 American Dental Education Association8. 2020 American Association of Colleges of Pharmacy9. December 2019 federal student aid data from the U.S. Department of Educations College Scorecard10. 2019 American Veterinary Medical Association

» MORE: Student loan payment calculator

What Percentage Of America Is In Debt

Asked by: Mrs. Abigale Romaguera DVM

According to financial experts, the percentage of Americans in debt is around 80%. 8 in 10 Americans have some form of consumer debt, and the average debt in America is $38,000 not including mortgage debt. Owing money just seems to be a way of life for Americans, as collectively we have $14 trillion in debt.

Fact Sheet: President Biden Announces Student Loan Relief For Borrowers Who Need It Most

A three-part plan delivers on President Bidens promise to cancel $10,000 of student debt for low- to middle-income borrowers

President Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity. During the campaign, he promised to provide student debt relief. Today, the Biden Administration is following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic.Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt.

  • Provide relief to up to 43 million borrowers, including cancelling the full remaining balance for roughly 20 million borrowers.

These reforms would simplify loan repayment and deliver significant savings to low- and middle-income borrowers. For example:

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Debt Snowball Vs Debt Avalanche: Consumers Split Down The Middle

The two most popular methods to make debt payments are:

  • Debt avalanche: Making minimum payments on all outstanding accounts, then using any remaining money designated for debts to pay off the bill with the highest interest rate.
  • Debt snowball: Paying off the smallest debts before moving on to bigger ones. This helps encourage consumers to keep paying off debt by celebrating multiple wins first.

Consumers generally dont prefer one over the other across all those surveyed, both methods tied at 50%. However, women and Gen Zers are more likely to prefer the debt snowball method, while men and Gen Xers opt for the debt avalanche method.

When it comes to what worked, though, the avalanche method takes a slight lead. Of those whove paid off their debts, 57% say they prefer the avalanche method. Meanwhile, 52% of those in debt say they prefer the snowball method.

Schulz says one method isnt better than the other. Rather, its just a matter of math versus psychology.

The best debt payoff method is the one that youre the most likely to stick with, Schulz says. If youre motivated by paying your debt off as quickly as possible and paying as little interest as possible, the avalanche method is for you. If youd be more motivated by getting wins, the snowball method is the way to go. Paying off debt is a marathon rather than a sprint, and sometimes mixing in a few small victories can be the fuel you need to keep going.

More Shocking Student Loan Debt Statistics

Key Debt Statistics for U.S. Consumers in 2022

If those numbers werent stunning enough, heres a closer look at how students accumulate debt based on the type of school they attend:

  • 55% of bachelors degree recipients graduating from four-year public and private nonprofit colleges in 2020 had student loan debt.
  • The average debt at graduation from four-year public and private nonprofit colleges was $28,400 in 2020, a $400 decrease from 2019.
  • 66% of graduates from public colleges had loans , according to 2016 data from an April 2019 report the latest available.
  • 68% of graduates from private, nonprofit colleges had loans in 2016 .
  • 83% of graduates from for-profit colleges had loans in 2016 .
  • Students and parents borrowed an estimated $95.9 billion in the 2020-2021 academic year, and 13% of that were private and other nonfederal loans.
  • 48% of borrowers who attended for-profit colleges default within 12 years, compared with 12% of public college attendees and 14% of nonprofit college attendees.

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Ways To Lower Your Debt

Getting out of debt may sometimes feel like climbing out of a deep dark hole, but there are tips on how to start climbing.

Every journey starts with the first step, even getting out of debt:

  • Make a budget. A budget can help you get real about what you earn and what you are actually spending. Seeing how much you’re spending on coffees or other random items that may not be necessary can be a very helpful way to cut down on your spending and help you pay back debt faster.
  • Commit to not taking on more debt. Work hard to pay down what you already owe before adding any new debt. This includes avoiding making any unnecessary purchases. The more you add to your debt load, the harder it will be to manage and reduce your debt.
  • Pay bills in full and on time. The greatest gift you can give yourself as you try to reduce your debt is to stop paying interest. And the only way to do that when it comes to most debt is to make a full payment every time your statement is due. Avoid wasting money by making payments late and getting dinged with late fees.
  • Pay off high-interest debt first. This is such a helpful tip. Figure out which debt is charging you the highest amount of interest and make it a priority to pay these down first. The difference this makes if your debt is spread across several lenders with different interest rates can be considerable.
  • For the other types of debt â student and car loans and credit card debt â consider changing your thinking about debt altogether.

    Best Way To Pay Off Debt: What Consumers Think Vs Whats Worked

    More than 1 in 5 Americans are now debt-free after paying off their balances. Among these consumers, 45% say they got out of debt by sticking to a strict budget and 35% say they put all their extra money toward paying off their debts.

    But thats not what the majority of indebted consumers think works. While 45% agree that increasing monthly payments is the best way to get out of debt, just 16% think budgeting works.

    Meanwhile, the majority of all consumers surveyed agree with those who are debt-free: If a loved one were struggling with debt, 46% would advise them to stick to a budget. Meanwhile, 33% would advise them to cut up or cancel their cards to stop spending.

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    Create A Budget And Cut Out Discretionary Spending

    Creating a budget may sound like such a bore, but it’s one of the most important parts of building a debt paydown plan. By doing this, you can figure out a nearly exact date of when you’ll officially be debt free.

    As you create a budget, do your best to cut out discretionary spending, as this particular category of spending is where budgets can get significantly dragged down. Whether it’s regular trips to your local coffee shop or shopping sprees on Amazon, cutting down on non-essential spending will allow you to redirect any cash towards your debts.

    Consider using a free budgeting tool offered by Mint or Personal Capital to help you create a budget and track your spending.

    Expected College Debt For A 2022 High School Grad

    United States Debt Limit – Explained

    A 2022 high school graduate could expect to borrow $39,500 for their bachelors degree, according to a May 2022 NerdWallet analysis of National Center for Education Statistics data. Around 45% of high school graduates are expected to enroll in college, NerdWallet found. Among those students, around 42% are expected to take on student debt over an average five years to attain a bachelor’s degree.

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    How Many Americans Are In Debt

    Even though household net worth is on the rise in America so is debt.1 The total personal debt in the U.S. is at an all-time high of $14.96 trillion.2The average American debt is $58,604 and 77% of American households have at least some type of debt.3,4,5

    Lets pause a second to define debt. Plain and simple, debt is owing any money to anybody for any reason. If you have debt, youve most likely agreed on terms of repayment, and those terms mean specific payments at specific time periods until the debt is paid offtypically with interest .

    Some of the most common types of debt in America include credit cards, student loans, auto loans, home equity lines of credit , and mortgages. Though each impacts Americans of all ages, some age groups are more impacted than othersso well look at not only American totals and averages, but also at debt across various age groups.

    Student Debt In Perspective

    Student loans help pay for tuition and fees, as well as room and board and other educational costs like textbooks. Among those who borrow, the average debt at graduation is $25,921 or $6,480 for each year of a four-year degree at a public university. Among all public university graduates, including those who didnt borrow, the average debt at graduation is $16,300.1 To put that amount of debt in perspective, consider that median annual earnings for bachelors degree holders are $36,000 or 84 percent higher than those whose highest degree is a high school diploma.2 Bachelors degree holders make $1.2 million in additional earnings over their lifetime.3

    Whats more, the share of student-loan borrowers income going to debt payments has stayed about the same or even declined over the past two decades.4 Although 42 percent of undergraduate students at public four-year universities graduate without any debt, a student graduating with the average amount of debt among borrowers would have a student debt payment of $275 a month.5 In recent years, most students with federal loans became eligible to enter an income-driven repayment plan for federal loans. Under such plans, students typically limit student-loan payments to 10 percent of their discretionary income.

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    Consumer Debt Is Not An Income Problem

    As household income increased, so did the average amount of consumer debt, with the exception of one income group.

    People often think that when their income increases, their lifestyles should too. But thats not true. Raises give us the opportunity to invest in our futures, whether thats paying off debt, building an emergency fund, or saving for retirement, said Cruze.

    List Out All Your Debts

    Infographic: The US States With The Highest And Lowest Student Debt

    It might not be pretty, but its got to be done! People sometimes get so scared of this first step that they stop right here. Dont. You can do this.

    Our own Ramsey Solutions research found that nearly half of Americans say their debt level creates stress and makes them anxious. Yes, looking your debt in the eye might be difficult, but when you finally face the facts, you can follow a plan to attack it head on. Youre on the path away from money stress. So, keep walking.

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    What Would You Give Up To Be Debt

    Theres no shortage of advice on how to become debt-free. Yet, here we are: saddled with debt and worried sick about it. Why is that?

    Whether youre cutting costs or setting aside money into savings, making sacrifices is hard. The fear of missing out or FOMO is a very real obstacle that many people face every day. To better understand peoples non-negotiable expenses, we asked Americans who self-reported as being in financial debt: What products or services would you be unwilling to give up for a year to have all your current financial debt paid off?

    Only 7% said nothing. That means 93% of U.S. adults with financial debt have something that they would not give up for a year to become debt-free. Heres what topped the list.

    What Should I Do If Im In Debt

    The average American debt is at $92,727 and if you have a balance, the worst thing you can do is ignore it. Interest may accrue on your account, and missed payments could lead to late fees and damage to your credit.

    If youre looking to get out of debt, heres where to start:

    • Make a list of what you owe. List all of your debts with balances, due dates, interest rates, minimum monthly payments and contact information.
    • Go over your budget. Write down how much you earn each month and how much you spend on bills, such as rent, utilities, groceries and minimum debt payments.
    • Find room for debt payments. Subtract your bills from your income to see whats left over. Put this amount toward your debt each month. You can also put windfalls, such as tax refunds, toward your principal balances.
    • Prioritize the debts. Financial experts usually recommend using one of two methods: the snowball method or the avalanche method. With the snowball method, you pay off your smallest balance first, then move one by one to the largest. With the avalanche method, you can focus on paying off the balance with the highest interest rate first to save more money and work down from there.
    • Make a goal. Based on your debt balance and your extra payments, how long will it take until youre debt-free? For example, if you want to pay off $5,500 in credit card debt and you can pay $500 each month, then the balance should be gone in 12 months, assuming a 16 percent APR.

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    Get The Help You Need Along The Way

    Say it again: Youre not in this alone. And guess what? You dont have to figure everything out on your own either. Learn the ins and outs of debt in Financial Peace University.

    This nine-lesson course will teach you the plan to get outand stay outof debt, and get you pumped up to pay it off forever.

    And listen: It actually works. The average debt paid off in the first 90 days of working this plan is $5,300.

    When you’ve built a solid foundation of knowledge, it makes the debt-free journey quicker and easier. Thats a true win-win.

    Average American Debt By State

    Older Americans Are on the Front Line of the Student Debt Crisis

    Where someone lives tends to have a big influence on the amount of debt they accumulate.

    While some parts of the country have higher housing prices and costs of living, it can be lower in other states. California residents, for example, tend to have higher average mortgage balances than many other states with more affordable housing, like Texas and Ohio.

    Here is the average debt by type for residents of each US state, according to Federal Reserve Board of New York data from 2019. Scroll right to see the total amount of debt.


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    The Case For Being Completely Debt Free

    For many, living debt free is a dream that unfortunately may feel far from reality. Whether it’s a matter of strategic debt, such as a low-interest-rate mortgage or student loans, or high-interest-consumer debt that’s from a credit card, many Americans are accustomed to living in the red.

    For some, however, the very idea of owing someone money creates a sense of dread and the feeling of a large weight on your shoulders. This feeling alone is reason enough for many to fully prioritize paying down their debts.

    Tara Falcone, chartered financial analyst, certified financial planner and founder of the app Reason, explains how doing paying down your debts can fundamentally change your life and give you a sense of freedom.

    “Individuals that are completely debt free absolutely have a different mindset. There’s a greater sense of peace, freedom and opportunity that comes with being debt free,” says Falcone. “Not owing anyone anything or being beholden to anyone offers debt-free individuals more options and control over every dollar they own. When you have no debt, you’re able to, with 100% freedom, decide how and when to spend your money.”

    At the onset of the pandemic, like many young professionals, Beltran moved home to Arizona, using the opportunity to pay down all of her debts. After six months of saving and paying, she was finally debt free.


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