According to a new study, student loan debt is still growing. If you feel like you've read that sentence before, that's because you probably have. But this time there's a bit of an extra sad twist: Student loan debt is so pervasive that it now impacts one out of every five American households. That's a new record; one that's not exactly fun to brag about.
That stat comes from the Survey of Consumer Finances, which is sponsored by the Federal Reserve and conducted every three years. According to the Associated Press, in 2010 (the latest year the data was available) 22 million households were carrying student loan debt; that'ls double the amount since 1989 and up 15 percent since 2007. Unsurprisingly, as a share of household income, the student loan debt was largest among the poorest (those making less than $21,044 per year) and youngest (those 35 years old and under). In all, the average household carrying student loan debt saw that amount rise from $23,349 to $26,682.
Experts attribute the record debt to increasing college enrollment and rising tuition costs. And until one of those levels off or the economy picks up, the debt is expected to keep mounting. All the more reason to make sure you understand the details of your loan before signing off on one and to make your payments on time. The best way to do the latter is to set up automatic payments. If you have additional cash to throw at your debt, be sure to do that – paying more than the minimum due will pay off those loans faster. But prioritize all of your debts by interest rate: the interest rates on federal student loans are often much lower than credit card interest rates. Extra payments go to higher interest rates first.