7.2d Debt
As of 2022, 77.4% of U.S. families had debt (Aladangady et al., 2023). Figure 7.3 shows the percentage of families holding each kind of debt. The most common types are credit cards (45.2%), mortgages (42.2%), and vehicles (34.7%). Though only 21.8% of U.S. families hold any education loan debt, the value of that debt is the second-highest after mortgage debt. The average consumer debt balance for mortgages, for example, was $252,505 in 2024 (Horymski, 2025). In contrast, average federal student loan debt for people with an associate’s degree is $20,340. For individuals with a bachelor’s degree, the average federal student loan debt is $29,550. Figure 7.4 shows the percentage of borrowers holding various levels of student loan debt. While more than a third owe under $10,000 each, overall, the more than 42 million U.S. adults with federal student loans are holding a total of $1.7 trillion in debt (Hanson, 2025).
Figure 7.3
Percentage of U.S. Households Holding Different Kinds of Debt, 2022
Data based on Aladangady, A., Bricker, J., Chang, A. C., Goodman, S., Krimmel, J., Moore, K. B., Reber, S., Henriques Volz, A., & Windle, R. A. (2023). Changes in U.S. family finances from 2019 to 2022: Evidence from the survey of consumer finances. Washington: Board of Governors of the Federal Reserve System, October. https://doi.org/10.17016/8799. In the public domain.
Figure 7.4
Percentage of Borrowers at Different Student Debt Thresholds, 2018
Data from Baum, S. (2019, October). The impact and distribution of student debt. Brookings.https://www.brookings.edu/wp-content/uploads/2019/09/Baum_Debt_Brookings_October-2019.pdf. Copyright 2019 by Brookings.
Student loan debt has grown in recent decades. Through the 1980s and 1990s, federal support for student aid declined, as did state governments’ support for higher education institutions. Loans have become necessary for many families to afford the rising cost of a college degree.
Researchers are interested in understanding how and why families resort to debt to finance college. Zaloom (2019) interviewed 40 college students and a parent using debt to pay for college. She focused on middle-class families. She classified a family as middle class if they had too much income or wealth to qualify for federal grants but too little to pay the full cost of tuition without loans. For many, the cost of college begins to add up early. Zaloom (2019) found that parents pay more for housing in neighborhoods with good schools, for example, in anticipation of their child attending college. The middle-class families in her study also struggled to save money for their children’s college expenses because they need their income to meet their children’s present-day needs.
Education debt is complicated because it can constrain a household’s resources and limit choices in the short term. However, in the long term, college-educated individuals earn higher incomes and are better equipped to weather periods of unemployment, for example.