After graduating, many excited students sadly have to face their student loan debt. They might have a new job, but before they even get to see their first paycheck, there’s already a loan (or several loans) under their names.
For some students it is a very small amount of loans, for others, an overwhelming amount. At some point, every student can’t help but wonder: “is this a normal amount?”
The answer is not that simple
In truth, there is no “typical” amount of debt students have after graduating, because the answer is context-specific. Students graduate from school under varying circumstances.
The answer depends on a few different factors. Some students attended public universities, others private institutions. Some received a hefty scholarship, financial support from their families, or had a trust fund to help pay for their education.
Others may rely entirely on loans. Graduate and professional schooling adds on to any undergraduate debt. If you compare your student debt total to someone else’s, it may cause negative feelings to arise.
Two people can have the same student loan balance, and yet have totally different backgrounds, incomes, interest rates, and career outlooks.
The student loan debt amount alone will never provide the whole story, and it is certainly not a sign of personal failure.
Undergraduate vs. graduate student loan debt
Debt levels can be different depending on the type degree earned, such as an undergraduate vs. graduate degree. Undergraduate degree debt is often lower but still matters. I believe I graduated from my undergraduate college with approximately $18,000 in student loans.
Graduate and professional degrees tend to involve much higher amounts. This is particularly true for more prestigious universities, and for fields like law, medicine, and business.
The difference matters since a higher debt amount does not necessarily mean you’re in trouble. In fact, sometimes a higher student loan debt balance means higher income earning potential.
Student debt only becomes a problem when it limits you from having basic financial stability.
Why debt might feel so heavy after graduating
Debt might feel heavier immediately after graduating because that is typically when the freeze or hold on loan repayment is removed, and you become responsible for paying it back. The structure (school) that had been delaying repayment for so long is gone.
While you are attending school, loans feel like an abstract theory that you don’t really need to worry about. After graduation, it feels more tangible: you might start to get emails or mail from loan service providers, and loan interest begins to accrue.
Simultaneously, recent graduates are typically on a starting salary. Entry-level salaries, temp work, or an ongoing job search can make even the smallest amount of student loan debt feel like the end of the world.
Post grad finances may feel stressful because of the discrepancy between your loan balance being at its highest, when your income is likely at its lowest.
Student debt does not typically mean financial ruin
Having post grad debt does not mean you’re behind. Generally, your debt is not good or bad. Remembering to keep a neutral perspective helps you make good financial decisions in the future.
Your student loans were just used to access education that you would not otherwise have had access to. Repayment will depend on your income, financial habits, and money decisions.
It also helps to remember that most adults, even if they don’t carry student loan debt, do carry some other form of debt. That includes business loans, car loans, and mortgage loans.
Regardless, comparison to others is off the table. Instead, it’s important to focus on developing a repayment plan that works for you.
What matters more than your student loan debt amount
Instead of asking whether your debt is typical, consider asking the following questions:
- Are you sacrificing essentials or basic needs because you need to pay off your monthly student loan balance?
- Do you understand your loan interest rates and the repayment options available to you?
- Will your income likely increase with time?
- Are you avoiding any additional debt?
If you can answer these questions at all, you off to a great start!
Change your perspective
Carrying debt is temporary, not forever. It will shrink as you make more money and learn to manage your finances better.
The first few years after graduating college or grad school, your financial situation will be stabilizing, which is completely normal. You will be learning how to budget in a way that works best for you, prioritizing what is important to you, and deciding how to make your impact in the world. Stability and security will come with time and practice.
Wrap-up
If you’re carrying student loan debt, you’re just one in 43 million. It does not mean you are failing or irresponsible. You are just navigating a system that requires you to pay a lot of money for an education before you have a stable income.
Thank you so much for reading my article! I am not an expert by any means, I am just someone who wants to slow down and understand the basics before taking any steps! Follow my journey if you’d like!
Check out the rest of the blog for personal finance guides, tips, and more!