Has the student debt crisis reached a tipping point? Higher education was once one of the surest paths to a well-paying job and achieving the “American Dream.” However, much has changed about a college degree in America, including the cost. Despite the rising costs of a degree, college is still regarded as one of the ideal post-high-school paths. Yet, this is a costly decision for new adults to make.
There are dozens of options that young adults have to either ease the cost of college, or build their own career, and yet student loans remain one of the most widely used forms of assistance. However, many young adults have a limited scope of what they’re really signing when they agree to a loan and get saddled with mountains of high-interest debt.

Average Student Debt
While loans can be a great way to fund a highly desired degree, and build the means to pursue an education, not all students have a full understanding of their loans. Many teens have limited experience with paying bills (if any), and don’t have the life experience to understand how it will impact their lives in four or more years. Upon graduation, many adults are experiencing mortgage-level debts. This can be a heavy burden for those who are just starting their journey into adult life.
As you can see below, the average student debt by state is only about $40,000 or less. However, more than 2.6 million borrowers have an average student debt greater than $100,000. And to top it all off, 14.4 million borrowers aged 35-49 have a staggering total of $622 billion in US student debt.

Source: TICAS
This is a significant debt obligation, and not something a student can simply work off over a summer like many used to be able to do. Many students will spend over a decade paying for school. This student debt crisis can stunt graduates’ abilities to make other important financial moves early on in life.
Based on 2021 Q3 Fed information and U.S. Dept. of Education data:
- $1.768 trillion: Total amount of US student loans.
- $968 billion: Total direct loans in forbearance. This represents 24 million borrowers (up from 2.4 million in 2019).
- $112 billion: Value of the direct loans that have defaulted. This represents 5.1 million borrowers.
- 43.4 million: Total number of US student loan borrowers.
- $40,329: Average student loan balance.
- $460: Average monthly payment for student loans.
Student Debt Forgiveness
Rising college costs will continue to rise, which means debt obligations will only continue to go up. Finaid acknowledges borrowing is now almost inevitable. “Few students can afford to pay for college without some form of education financing.”
Although college may possibly improve one’s lifetime earnings, student loan indebtedness can present greater financial dilemmas. These unique financial obligations and their negative financial impact can last a lifetime. Of the $1.7 trillion in total debt, 92% is money owed to the federal government. What’s additionally concerning is every 26-seconds, a student defers on their loans.

Source: Credit Summit
Most student loan debt is secure debt through the federal government. It’s almost impossible to erase it even with a bankruptcy filing (there are ways to reduce it, which we’ll explore further below). As College Scholarships remarks about student debt forgiveness on its website: “Student loans are rarely forgiven since they are guaranteed government funds dispersed with low interest to all kinds of people with no credit history. You don’t expect the IRS to forgive you on all taxes that are owed, so expect the same treatment with your student loan.”
Regular Payments Don’t Always Amount to Much
These sizable and long-term obligations represent indenture for many Americans. Without loan forgiveness in bankruptcy proceedings, except in extenuating circumstances, the escalating debts can continue to stick around even in dire straights. The student loan debt crisis is a toxic debt contract that can even extend beyond retirement. Based on Consumer Protection Financial Bureau data, seniors age 60 and older owe more than $86 billion in student loan debt.
How to Avoid Student Loan Debt
Despite talks in the current political environment, it’s unlikely that the student debt problem will be solved entirely, or that education will be free. Nor should we “plan” for that to be the case. Because as we all know, plans can change. And if things don’t swing that way, you or your loved ones don’t want to be caught unprepared.
It’s an even better idea to look toward the future with a mind for preparation in a variety of scenarios, so that you can thrive no matter what.
If you have a student getting ready for college, here are some things to consider on how to avoid student loan debt:
- Taking a gap year to work and save, especially if your student doesn’t know what they want to do with their degree.
- Investing in a business idea or entrepreneurial pursuit.
- Seeking a trade school.
- Earning credits for general education courses using CLEP exams.
- Pursuing an Associate’s degree at Community College first.
Conclusion: Education Great; Debt Bad; Preparation Essential.
No one is arguing that gaining knowledge and improving skills aren’t valuable. What’s troubling is the data seems to show that the benefits of college aren’t improving even though costs are increasing. The critical takeaway here is that college is no longer a universally wise decision. Some people are more entrepreneurially-minded, and we now live in a technological age that supports that. Other people can thrive in trades, and earn a great wage without debt. And some people just don’t know what they want, and college is an expensive way to find yourself.
Choosing to go to college is a major financial decision. It should not be a “given” in today’s world, and with today’s costs. Especially when there’s a student debt crisis. There are many, many alternatives that can suit individuals with different desires and objectives. There are many ways to find success that don’t involve college, and it’s time to embrace that.
The Best Way to Save for College
When strategizing the best way to save for college, there’s a lot to consider. Waiting to create a strategy limits your choices, as well as that of your child. Helping your children grow up with a strong sense of self, as well as a good work ethic can go a long way. In other words, you may find out that your child is either a good match for school or a good match for some other path. A good work ethic, on the other hand, can go a long way in facilitating scholarships.
Saving now, and saving in a way that remains flexible despite what your child decides to do, is an essential step in saving for school and reducing future government debt. Whole life insurance is both flexible and liquid and can be a great option. We’d love to help you discuss options so that you’re prepared for any future scenario and you don’t have to “hope for the best.” Feel free to contact us or email us at welcome@prosperitythinkers.com.
And don’t miss Kim’s latest book, Busting the College Planning Lies. Out December 6th, this book is the perfect handbook for any parent with kids aspiring for greatness. The book helps parents and children alike get clear on how to find a successful future no matter what path you choose. Within the book, you’ll learn the best ways to save for college, how to cut costs, and how to find your passion so you can determine if college is a good fit at all. This book is an essential piece of the puzzle for any parent thinking about college prep.
Disclosure: Our content is meant for educational purposes only. While it’s our goal to help you learn about building a life of prosperity, we do not intend to provide financial advice. Please consult your financial, tax or legal advisor before making any investment or financial decisions.