At a Glance

The outstanding Federal Loan Portfolio is more than $1.61 trillion, with more than 43 million borrowers having federal student loan debt. The average federal student loan debt balance is around $37,113 per borrower, but if you add in private loan debt, the balance can be as high as nearly $41,000.

Nationwide, 43% of college students report they have some type of educational debt, and 65% of students graduate with debt.

Taking on student loan debt seems like a normal part of the college experience, but that doesn’t mean it doesn’t have a short- and long-term impact on your life. In this article, read more about:

Effects of student loan debt

When taking out student loans, it’s critical to manage the money correctly and only take out what you need to cover your education. That’s because student loan debt can have huge consequences on your life for years, even decades, depending on how much you’ve borrowed, the terms of the loan, and how much you end up paying in interest.

There are many effects of student loan debt:

Buying a house may be impossible

Having a large amount of student loan debt may delay your ability to purchase a house. Even if you can afford monthly mortgage payments, having to put money toward your student loans each month may prevent you from saving enough for a minimum down payment. Having large outstanding debt can also make qualifying for low mortgage interest rates more difficult.

Moving out is more difficult

Even if you can’t afford to purchase a home, you may want to be able to move out and rent a place on your own. However, some studies show having large amounts of student debt can make even renting a challenge, especially if you live in big cities with high costs of living. In 2024, the national median price of an apartment was $1,987, an increase of nearly 22% compared to pre-pandemic costs. You may have to live at home for longer if you can’t afford rent.

Credit score could take a hit

When you have a large balance of student loan debt, it increases your debt-to-income (DTI) ratio and your credit usage, which can decrease your credit score. Missing payments or not making the minimum payments required can also decrease your score. This puts you at higher risk and can make it more difficult to qualify for funding or lower interest rates in the future.

You’re stuck with it

Even if you declare bankruptcy, student loans are rarely discharged. That means unlike other debts, such as credit card debt or mortgage, you’ll have to continue paying off your student loans regardless of your financial situation.

Potential to lose wages

If you have a federal loan that’s more than 270 days past due, or a private loan that’s more than 90 days past due, your loan defaults. For federal loans, the government can seize wages (up to 15%), your tax refund, or even Social Security for as long as it takes to pay off the loan.

Dreams put on hold

When you don’t have the finances to pay off your debt, this can affect your standard of living and determine what you’re able to pursue and what you must put on hold. For example, you may have to put off starting a family, getting married, taking a vacation, or making other large purchases because all of your extra income needs to go toward paying off the loans.

Continuing education is challenging

If you have a large outstanding balance of undergraduate student loans, taking out additional student loans for graduate school may not feel like a good idea. Even though those with graduate degrees will likely have a higher salary, the prospective costs may not outweigh the benefits of having the degree.

It’s mentally and physically taxing

Having a large amount of debt can negatively affect your health, both physically and mentally. You may feel stressed, overwhelmed, or depressed when you think about your debt and paying it back. This could lead to lack of sleep, over- or undereating, low energy, headaches, or other aches and pains. It could also influence the way you interact with others, as you may feel more angry or sad.

Taking a job for only the salary

Some students may rush into taking a job so that they have a source of income, even though it may not be the job they want. In fact, a recent study by the American Student Association showed that nearly 50% of graduates agree their debts hampered their ability to further their careers because they had to take the job that paid more, or whatever job they could find, rather than pursuing their dream job.

Can impact relationships

Having a large amount of debt, which can lead to financial stress, can put a massive amount of pressure and stress on marriages and relationships.

How to limit the impact of student debt

Whether you already have student loans or are considering taking out loans to help pay for college, there are a few things you can do to help limit the impact student debt can have on your life.

If you haven’t yet started school, or are still in school and haven’t had to start paying off your loans yet:

  • Apply for scholarships and other financial aid to limit the amount you must borrow.
  • Choose a school that’s less expensive to attend. For example, you may want to go to a public university instead of a private one, or stay in-state to avoid paying out-of-state tuition.
  • Get a part-time or full-time job during summers and breaks and put as much as possible toward paying off your debt, or set it aside in a savings account to pay off in the future.
  • Only borrow what you need to pay for your tuition and other education expenses. Avoid using funds from private student loans to pay for other non-education related things.

If you have graduated:

  • Sign up for automatic payments, which can ensure you don’t miss a payment (which can lower your credit score).
  • Explore loan repayment options available to you, such as income-driven repayment plans or loan forgiveness programs.
  • Talk to your loan provider. They may have programs available for those who cannot afford to make payments.
  • Consider consolidating your loans.

Are student loans worth it?

It may feel like student loan debt is ruining your life, so are student loans even worth it? For most students, the answer is yes – as long as you graduate and are able to pay back the debt. Your field of study can have a significant influence on this, as some careers pay more than others, and others may not require a college education at all.

Some reasons to go to college include earning higher pay, having more opportunities for employment, and getting better benefits. For example, the median weekly earnings for workers with a high school diploma (and no college) is $901 in 2024. Those with a bachelor’s degree earned an average of $1,680.

The unemployment rate also decreases for those with higher levels of education – around 4% for those who didn’t attend college compared to about 2% for those with bachelor’s degrees.


Who is affected most by student loan debt?

According to Education Data, 58% of all student loan debt belongs to women. Black college students are the most likely to use federal loans, with 49.4% borrowing. Thirty-percent of black college students with student loans default in the first 12 years of repayment, though white and caucasian borrowers owe 54% of the total national student loan debt balance. Thirty-five-year-olds have the highest average outstanding student loan debt per borrower ($42,600), with an end balance 287% of the value of their original loan.

Does student debt affect the economy?

The federal student loan debt balance in the U.S. has almost tripled in the past 15 years, with federal and private student loan debt averaging about $1.75 trillion in 2024. When debt grows, it reduces business growth and suppresses consumer spending, which can negatively affect the national economy. The increased debt burden, lower credit score, and limited purchasing power of those who have student debts means consumer spending is lower.