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 Debt
According 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 payment
In 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 payment
Experian'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:
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 comparison
With 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).
Although 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).