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US student debt levels set a new record in 2018—here's how much the typical borrower owes

Students attend the commencement ceremony on May 27, 2018 at Wesleyan University in Middletown, Connecticut.
Eduardo Munoz Alvarez/Getty Images
Students attend the commencement ceremony on May 27, 2018 at Wesleyan University in Middletown, Connecticut.

This year, U.S. student debt levels set a new record. According to the St. Louis Federal Reserve, borrowers collectively owe over $1.5 trillion in student loans.

Debt has become an inevitable part of going to college for millions of Americans. The most recent Survey of Household Economics and Decision-making (SHED) from the Federal Reserve Board indicates that 42 percent of Americans who attended college, and 30 percent of all adults, have incurred debt in order to finance a degree.

How much the average borrower owes

Based on SHED figures, Americans with education debt owe between $20,000 and $25,000 on average. The typical monthly payment is between $200 and $300 per month.

There are several kinds of debt that Americans take on in order to afford an advanced degree, the most common being student loans. Among borrowers who took on debt to pay for their own schooling, 94 percent have taken on student loans, 25 percent have taken on credit card debt and 6 percent have taken on home equity loans.

Americans are also increasingly likely to take on loans to help family members with their education expenses. Of these borrowers, 82 percent have taken on student loans, 22 percent have taken on credit card debt and 14 percent have taken on home equity loans.

How we got here

One reason for the increase in student debt is simply because more Americans are going to college than ever before. This trend is unlikely to change. The Georgetown Center on Education and the Workforce predicts that by 2020, 65 percent of all jobs in the American economy will require education beyond high school.

Workers with advanced degrees also consistently out-earn those without. During the first quarter of 2018, college graduates earned weekly wages that were 80 percent higher than those of high school graduates.

A second important reason for the growing amount of U.S. student debt is the dramatic increase in the cost of higher education over the past several decades. According to the College Board's 2018 Trends in College Pricing Report, from 1988 to 2018, prices at public two-year and private non-profit four-year schools doubled, and in-state tuition and fees at public four-year schools tripled.

The dynamic has put Americans in an impossible situation: They need to earn an advanced degree, such as a bachelor's degree, an associates degree or a professional certificate, in order to compete in the economy, but the cost can be prohibitively expensive.

"People, including young people but not just young people, understand that all sorts of jobs now require at least some sort of education after high school," says Sara Goldrick-Rab, author of "Paying the Price: College Costs, Financial Aid and the Betrayal of the American Dream" and professor at Temple University. "And it is simply not affordable right now."

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