Because of the coronavirus pandemic, the price of higher education is an even bigger consideration than usual for students and their families. At the same time, the cost of a four-year college or university has never been higher.
Average tuition and fees for the 2020-21 academic year increased by 1.1% to $10,560 for in-state students at four-year public colleges, according to the College Board, which tracks trends in college pricing and student aid. The data also showed tuition and fees at four-year private institutions rose by 2.1% to $37,650.
Most students must borrow to cover much of the cost, which has already propelled collective student loan debt in the U.S. past a stunning $1.7 trillion.
But this year’s incoming freshman class will rely on loans even more in pursuit of a degree at a public college or university, new data shows.
Typically, seven in 10 college seniors graduate in the red, owing nearly $30,000 per borrower, according to data from the Institute for College Access & Success.
Going forward, a 2021 high school graduate could take on as much as $38,147 in student loans, on average, according to a recent NerdWallet analysis of data from the National Center for Education Statistics. That’s up from $37,200 for 2020 high school grads.
The report factors in that it now takes five years, on average, to complete a four-year bachelor’s degree, given that more undergraduates are taking time off.
Even the interest rates on federal student loans are set to rise by nearly one percentage point starting in July.
This will increase monthly loan payments on a 10-year repayment term to $99.99 from $95.41 for every $10,000 in debt borrowed that academic year, according to higher education expert Mark Kantrowitz.
For those already struggling under the weight of student debt, President Joe Biden used his executive powers to extend the pause federal student loan payments until October.
Although the upcoming annual White House budget proposal won’t include any student debt forgiveness, the status this proposal is still unknown.
“The fact that President Biden didn’t include student loan forgiveness in his budget request does not mean that student loan forgiveness won’t happen,” Kantrowitz said.
Biden has asked the U.S. Department of Justice and Department of Education to issue a report on the limits of his authority to forgive student loans through executive action, and he is unlikely to take any action until he receives those findings, whether through executive action or proposed legislation, Kantrowitz added.
The Education Department also said Monday it is starting the process of issuing new regulations focused on student loan repayment and debt-forgiveness programs.
In the meantime, the payment pause offers borrowers a rare opportunity to chip away at the balance of their loans or other high-interest debt or put the money toward an emergency savings fund.