College Grads with Loan and Credit Card Debt

Delivered February 14th, 2018. Contributors: Shannon L., Emmanuel A., Kennedy H. and

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College Graduates - US Student Loan and Credit Card Debt Overlap

Of U.S. college graduates who have student loan debt upon graduation, 76% also have credit card debt. Overall, 69% of college graduates have student loan debt and 30% have credit card debt. The average monthly student loan payment is $351.00, and the average minimum credit card payment has been calculated at approximately $102.92. A deeper look at these results is below.
Both student Loan and credit Card DebtAccording to a 2017 Sallie Mae "How America Pays for College" report, 19% of college costs in the United States are paid through borrowing, either by the parent or the student. The majority of college cost payments comprise student loans, but 4% of students and 3% of parents use credit cards to fund college costs.

What's more is that a 2016 DealNews study suggests there may be a correlation between credit card debt and student loan debt. The study found that of the U.S. graduates who have student loan debt upon graduation, 76% of them also have credit card debt. Nearly half (47%) of these graduates said they regret taking out a student loan and carrying a credit card balance, as having both types of debt "feels like a mistake to [the] survey respondents."
Only Student loan debt and average monthly paymentIn 2016, Experian, a major credit reporting agency, conducted a Graduate Credit Survey and found that 69% of college graduates leave college with at least some student loan debt, with the average graduate owing $22,813. A LendEdu study reports the average monthly student loan payment for college graduates between the ages of 20 and 30 years old is $351. 
Only credit card debt and average monthly paymentExperian's Graduate Credit Survey also discovered that upon graduation, 30% of college students have a credit card balance that averages $2,573. Unfortunately, despite extensive research into several college credit studies, surveys, and reports, I was unable to find an average monthly credit card payment. However, The Balance explains that "most U.S. banks require credit card holders to pay 4% of their balance every month." Using this figure and the average credit card balance for college graduates, we can calculate an average minimum monthly payment:

 $2,573.00 x 0.04 = $102.92

Therefore, we can say the average minimum monthly credit card payment for college graduates is $102.92. This number will be used to compare monthly credit card payments with monthly student loan payments, but it is important to note that while 45% of college graduates that have both student loan and credit card debt only pay the minimum amount due for both debts each month, 36% report paying more than the monthly minimum on both debts every month. The remaining 19% report sometimes paying more than the minimum on their student loans, but not on their credit cards.
Monthly payment comparisonWith the average monthly student loan payment at $351 and the average minimum credit card payment for college graduates calculated at $102.92, we can see that the average monthly student loan payment is more than three times as much as the average minimum monthly credit card payment. 

Much of this discrepancy can be attributed to the fact that college graduates typically owe nearly ten times more in student loans ($22,813) than they do in credit card debt ($2,573) when they finish college. In noting that the minimum monthly credit card payment is 4% of a balance, it appears the average student loan payment is significantly less. Since 4% of the average student loan balance would be $912.52 ($22,813 x 0.04), the minimum payment of $351.00 would represent about 1.5% of the outstanding balance ($22,813 x 0.015 = $342.20).
ConclusionAlthough the average monthly payment for student loans is $351.00 and for credit cards is $102.92, college graduates are actually paying a lower percentage (1.5%) of the outstanding balance on student loans than they are for credit card balances (4%). However, 76% of college graduates who have student loan debt also have credit card debt, which means these graduates have an average monthly combined payment of $453.92 ($351.00 + $102.92).

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College Graduates - US Student Loan Debt Payments

Based on the amount spent monthly, student loan debt is ranked 7th when compared to other monthly expenses in the US when there is no child in the household and 9th when childcare expenses are factored in. Despite the fact that standard repayment plan for federal student loans puts borrowers on a ten-year repayment plan, a study found that it takes an average of 21 years for borrowers in the US to repay their student loan debt from a typical four-year degree. 

Below, you will find more details. Within the brief, there would be some information that is older than 2 years about the average loan-repayment duration. However, this data comes from a credible and reliable survey and no newer data is available online on the topic, hence its inclusion. 
FINDINGS
Rank of Students Loan Debt In Relation to Other Monthly Expenses
To rank student's loan debt among other monthly expense in the US, we used the average amount spent monthly on various monthly expenses to find where students loan debt rank. Based on 2016 data (the latest available) and an average household income of $74,664 in 2016, students loan debt ranked 7th to other monthly expenses when there is no child in the picture as shown below:

Housing: $1,574
Transportation: $754
Food: $600
Personal insurance and pensions: $569
Retirement savings: $386
Healthcare: $384
Student Loan Debt: $351
All other expenditures: $328
Entertainment: $243
Cash contributions: $173
Apparel and services: $150

If there is a child and child care expense ($867-$2,448 monthly) and school expense ($743-$1,127 monthly) are factored in, however, student loan debt may rank 9th when compared to other monthly expense.

In terms of its ranking among other types of loans, students loan debt is ranked third based on the amount paid:

Mortgage loans: $1,179 for existing homes 
                             $1,463 for new construction homes
Car loans: $504 for new cars
                   $365 for used cars
Student loans: $351
Personal loans: $250 to $337, depending on credit score
Credit cards:   $156 minimum payment

Average Number of Years To Repay Student Loans
According to research by One Wisconsin Institute, although "the standard repayment plan for federal student loans puts borrowers on a 10-year track to pay off their debt, it takes an average of 21 years to repay the average debt from a four-year degree." For students with advanced degrees, it was typically longer.

There are different loans program with different repayment plans. Some put borrowers on a course to repay the debt in less than ten years, while others are above ten years. Some are also income contingent. You can access statistics (number of borrowers and total debt) on the 2018 national student loan debt by repayment plan here.

CONCLUSION
To wrap up, student loan debt is ranked between 7th and 9th in relation to other monthly expense, while the average number of years it takes to repay a student loan is about 21 years.

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College Graduates - US Graduate school vs. undergraduate school loan debt

The average student debt for undergraduate degrees obtained from non-profit and private schools in 2016 was $28,446. The most recent average for undergraduate student debt that includes for-profit colleges and universities comes from 2012 and amounts to a total of $32,600 in student debt. Also, the average student debt for an undergraduate and graduate degree based on the most recent data released in 2012 is $57,600.  Below, you will find more details.

FINDINGSAfter searching extensively, we were unable to find information from the most recent graduate year, 2017. The Institute for College Access and Success (TICAS) most recently released their report on average student debt of undergraduate students that graduated in 2016, in September 2017. For this reason, the most recent and accurate information regarding average student debt for undergraduate degrees comes from 2016. The information included in the report pertains to public and non-profit colleges. Information that includes for-profit universities is not publicly released as often, and so the most recent information that includes these colleges is from 2012. This is also the same situation for studies that include debt for graduate degrees, which is most recently available from 2012 as well.

Undergraduate DebtFor the use of a comparison in the growth of student debt, the average student debt for undergraduate degrees in 2012 was $32,600, with the following breakdown based on college types:

Public Colleges: $25,550 
Private Non-profit Colleges: $32,300 
For-Profit Colleges: $39,950 

[$25,550 public] + [$32,300 private non-profit] + [$39,950 for-profit] = $97,800

[$97,800 total debt] / [3 college types] = $32,600 average debt

In 2015, it was calculated that the average undergraduate student debt across all college types was $37,172, which was a 4% increase from 2014. By 2016, the total undergraduate increased another 6% to $37,172.

The TICAS report from 2016 indicated that the undergraduate degree debt from only non-profit and public colleges amounted to $28,446. However, there were ranges of student debt from as low as $4,600 in some states to as high as $59,100 in others. The state with the highest average student debt in 2016 for an undergraduate degree was New Hampshire, with an average of $36,367 in student debt. Utah had the lowest average for an undergraduate degree, amounting to $19,975 on average. 

Although no official report has yet been released that includes information pertaining to an average undergraduate from 2017, one article mentioned that the average student debt for individuals graduating from public colleges is estimated to be around $26,828, and $30,281 for private schools. 

Undergraduate & Graduate DebtSimilar to for-profit colleges, graduate programs do not release as often as undergraduate ones, the total amount of debt that their alumni leave with. For this reason, the data mostly comes from 2012, although some sources have more recent information from 2015 and 2016.

The overall average debt for students that obtained an undergraduate and graduate degree was $57,600 in 2012. This average includes programs such as medical schools, law schools, MBA programs, etc. Multiple recent sources cite the data from the 2012 report above, proving that it's the most up-to-date info available. Data for the various programs cited are as follows:

Master of Business Administration: $42,000 
Master of Education: $50,879 
Master of Science: $50,400 
Master of Arts: $58,539 
Law: $140,616 
Medicine/Health Sciences: $161,772 

Another source noted that the average student debt for graduates that had an undergraduate degree and pursued a law degree afterwards, was approximately $126,452. No year was attached with this value, but the article from which it came was published in 2016. This same article also published a value for average debt for undergraduates that pursued medical degrees, and found that in 2015, the average student debt equated to $172,751. 

ConclusionTo wrap up, based on the most recent data released in 2012, the average student loan debt for undergraduate degree is $32,600, while the average student loan debt for both undergraduate and graduate degree is $57,600.