The Long Half Life of Student Loans

Most college students take out loans to pay for their education, and many are still paying them back decades later, according to a study by the National Center for Education Statistics. Among first-time beginning postsecondary students who began school in 1995–96, the 55 percent majority took out federal education loans. Among those who began school in 2003–04, a larger 63 percent took out loans.

Those loans never die, apparently. The 1995–96 students still owed 70 percent of the amount of their education loans 12 years later. The 2003–04 students still owed an even larger 78 percent 12 years later. After 20 years (!) the 1994–95 students still owed 22 percent of their education loan amount.

The difficulty in paying back student loans explains why the share of American households with education debt has reached dizzying heights. According to the Federal Reserve Board's Survey of Consumer Finances, nearly half of householders under age 35 had education loans in 2016, as did one-third of householders aged 35 to 44, one-fourth of householders aged 45 to 54, and one-eighth of householders aged 55 to 64...

Percent of households with education loans in 2016 (and 2001)
Under age 35: 44.8% (26.1%)
Aged 35 to 44: 34.4% (12.5%)
Aged 45 to 54: 23.8% (11.0%)
Aged 55 to 64: 12.9% (5.2%)

Source: National Center for Education Statistics, Repayment of Student Loans as of 2015 among 1995–96 and 2003–04 First-Time Beginning Students