How Much Student Loan Debt Is Too Much?

Q: How much student loan debt is in the United States?

The overall federal and private student loan debt across the United States exceeds $1.77 trillion as of Q1 2023, according to Federal Reserve data. The vast majority of this debt — about $1.6 trillion — consists of federal student loan obligations held by 43 million borrowers. As of 2023, the average federal student loan borrower owes more than $37,000 in education loan liabilities.

Q: Can you lower your student loan monthly payments?

Yes, you may have several options to lower your student loan monthly payments. If you’re a federal student loan borrower, you may lower your monthly payments by enrolling into an income-driven repayment plan or consolidating your loans into a single federal loan with a longer repayment period. Another option is refinancing your student loans with a private lender for a lower interest rate. (Refinancing for a longer term may increase your total interest costs.)

Q: How do you know when you have too much student loan debt?

You may have too much student loan debt if you find yourself in economic hardship and unable to make monthly payments. Entering delinquency, going into default, or relying on deferments is probably a sign that you are burdened with too much student loan debt. You may have too much student loan debt if your gross monthly income is insufficient for covering your debt obligations.

Sulaiman Abdur-RahmanUpdated August 9, 2023

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March 2025: The Saving on a Valuable Education (SAVE) Plan for federal student loan repayment is on hold due to a court injunction. As of late March, these loan repayment plans are available: Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment. Federal student loan consolidation applications are also live. To monitor the latest decisions on federal student loan plans, check the Federal Student Aid site.

Borrowers who cannot afford their student loan payment obligations may be carrying too much student debt. As of 2023, the average federal student loan borrower owes more than $37,000 in education loan liabilities.Student loan debt across the United States exceeded $1.77 trillion as of the first quarter (Q1) of 2023, according to Federal Reserve data. The vast majority of this debt — about $1.6 trillion — consists of federal student loan obligations held by 43 million borrowers.After a three-year payment pause, the Covid-19 forbearance is set to end on Aug. 30, 2023. As a result, interest accrual on federal student loans will resume on Sept. 1, and payments will be due starting in October 2023.

Student Loan Debt in the United States in 2023

The average student loan debt across the United States is tens of thousands of dollars per borrower. As mentioned earlier, the average borrower holds more than $37,000 in federal student loan obligations as of 2023.Consider the following data:

Student loan debt across the United States (federal and private) exceeds $1.77 trillion as of Q1 2023, according to Federal Reserve data

Federal student debt is about $1.6 trillion as of 2023

The private student loan market represents less than 10% of outstanding student debt

The vast majority of private student loan borrowers also have federal student debt

There’s about 43 million federal student loan borrowers as of 2023

Some borrowers may never finish repaying a student loan during their lifetime. What happens to student loans when you die is the debt might be discharged, although some private lenders may demand repayment from your estate.Borrowers can make more than the minimum payment when paying off student loans. Prepaying your student loans can minimize your interest costs, and there’s no penalty for paying off your student loans early.Recommended: How Long Does It Take To Pay Off Student Loans?

How Much Is Too Much Student Debt?

Borrowers who can’t afford their student loan payments may be carrying too much student debt. A student loan deferment allows borrowers to temporarily stop making payments on their student loan debt obligations.Federal student loan borrowers can request a deferment for various reasons, including economic hardship or unemployment. Some private lenders may also offer temporary deferment relief to qualifying borrowers.Borrowing money to attend college can help you achieve your goals, but getting overwhelmed with student loan debt may trigger financial stress and anxiety.Recommended: Student Loan Debt and the Racial Wealth Gap

Calculating Your Student Loan Payments

Borrowing money to help pay for tuition and other college expenses puts you in debt and makes you legally responsible for repaying your student loans. The federal government has a loan simulator that can help you calculate your federal student loan payments.The U.S. Department of Education offers several repayment plans for federal student loan borrowers. The Saving on a Valuable Education (SAVE) Plan, which replaces the Revised Pay As You Earn (REPAYE) Plan, may reduce a borrower’s monthly payment to $0 per month for at least one year depending on income and family size.If you are interested in lowering your student loan payments, you may consider federal income-driven repayment (IDR) plans or student loan refinancing. You may refinance federal and private student loans with a private lender. Refinancing student loans may lower your interest rate. (Refinancing for a longer term may increase your total interest costs.)Reviewing the pros and cons of refinancing student loans can help you decide whether refinancing is right for you. One of the advantages of refinancing student loans is it may provide you with a lower interest rate. One of the big disadvantages of refinancing student loans with a private lender, however, is you’ll be forfeiting federal benefits. Refinancing federal student loans will remove your access to federal IDR plans and forgiveness programs.

Lowering Your Student Loan Payments

You may consider the following options if you’re a federal student loan borrower interested in lowering your student loan payments:

Consolidate Your Student Loans

Borrowers may consolidate their federal student loans into a Direct Consolidation Loan. Consolidation can merge all of your federal student loan liabilities into a single federal loan. It can also give you up to 30 years to repay your loans in certain cases. You may lower your monthly payment by consolidating into a longer repayment period.

Student Loan Forgiveness

Private student loan borrowers may have fewer options for student loan forgiveness than federal student loan borrowers. The federal Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness programs are not available to private student loan borrowers.All federal IDR plans can end with a borrower’s outstanding balance being forgiven at the end of the repayment period. Forgiveness may come after 20 or 25 years under any of the IDR plans, but forgiveness may come earlier for some SAVE Plan enrollees.

Student Loan Refinancing

Borrowers may refinance federal student loans with a private lender. This means borrowers can pay off federal student debt with a private education loan that must be repaid under a private repayment plan. Refinancing student loans may lower your interest rate. (Refinancing for a longer term may increase your total interest costs.)As mentioned earlier, one of the big disadvantages of refinancing federal student loans is you’ll be forfeiting federal benefits. Refinancing federal student loans will remove your access to income-driven repayment plans offered by the federal government. If you’re questioning whether you should refinance student loans, refinancing may not be right for you if you’re eligible for PSLF or Teacher Loan Forgiveness.

Student Loan Refinancing With Lantern

If you want to refinance your student loans, Lantern by SoFi can help. Just fill out a form and compare your student loan refinance options. Refinancing may be right for you if you can lock in a lower interest rate. (Refinancing for a longer term may increase your total interest costs.)Lantern can help you compare student loan refinance rates and find the best one for you.

Frequently Asked Questions

How much student loan debt is in the United States?

Can you lower your student loan monthly payments?

How do you know when you have too much student loan debt?

Photo credit: iStock/RyanJLane

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About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.

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