College has long been considered a potent pathway to a better future. However, for millions of people in the United States, that path comes with a steep price tag and a lifelong burden. The U.S. student loan debt crisis has grown into a national emergency, with higher education’s increasing reliance on federal loans placing unsustainable financial pressure on borrowers.
In fact, more than now weighs on more than 40 million Americans. Now, with the end of the pandemic-era pause on payments, the pressure is on and intensifying at a rapid rate. Learn more about the causes behind this crisis, how today鈥檚 financial model contributes to it and how innovative institutions like 番茄视频 (ACE) are proving that attending college doesn’t have to mean taking on massive debt.
The Student Debt Crisis in America
The Collection of Defaulted Student Loans Is Restarting
During the COVID-19 pandemic, federal student loan payments were paused to help borrowers stay afloat. Then, during the summer of 2023, the Biden administration instituted the Saving on a Valuable Education (SAVE) plan, which entered a state of interest-free forbearance while its legality was debated. The millions of Americans who enrolled in the SAVE plan did not accrue interest on their debt during this time and were excused from making monthly payments on their loans.
Now the Department of Education has resumed collection on defaulted loans and with the expiration of the SAVE plan, . This summer alone, are expected to resume payments on overdue debt. Many of these individuals have faced years of mounting interest, poor communication from student loan servicing providers and few options for meaningful debt forgiveness. As it stands, this is just the beginning of broader consequences that threaten individual financial stability and the overall economy.
Why Is Student Debt a Problem?
By now, it鈥檚 a multi-million-dollar question that experts have consistently tried to answer: Why is student debt a problem in 2025?
The reality is that the issue at hand represents more than just a number. Most borrowers are either behind, in forbearance or in default. It鈥檚 an obvious financial crisis, but the emotional and mental burden it creates cannot be understated.
After all, student debt has the power to delay home ownership, stifle savings and exacerbate anxiety for individuals trying to secure their futures. Defaulting on federal student loans could result in withheld Social Security benefits and tax refunds. Defaulted loans can also remain on your credit history for up to seven years from the date of your first missed payment that led to the default, making it difficult to obtain credit cards, auto loans and mortgages.
These are :
- The U.S. holds over $1.6 trillion in outstanding federal student loans.
- More than 40 million Americans owe some form of education loan debt.
- Just 38% of borrowers are current on their repayment plans.
The Role of Title IV Loans in the Student Loan Crisis
At the core of the student debt crisis is the role of Title IV loans. These federal financial aid programs were designed to make college more accessible. While well-intentioned, these loans have become a primary funding source for many institutions. Over time, colleges and universities began to rely heavily on these loans to fund various university priorities.
Yet, instead of promoting grants or affordable payment options, many schools push college students toward loans as the default solution. This dependency fuels the cycle: More loan money means schools can continue increasing tuition without sufficiently considering the negative impact to students.
Tuition Hikes and Higher Ed鈥檚 Overreliance on Loans
Over the last two decades, many public and private institutions have raised tuition consistently, often outpacing inflation and wage growth. Graduate programs have become especially costly, sometimes exceeding six figures.
With graduate program costs exceeding federal student loan caps, many graduate students used loan programs like Grad PLUS to obtain the additional money needed. With this additional funding source students could tap into, institutions had even more leeway to raise program costs.
These increases are often justified by amenities, rankings or institutional prestige, but for most students, the rising cost doesn鈥檛 always mean better outcomes. In many cases, families are left with fewer affordable choices and more pressure to borrow.
Signed into law in July 2025, the One Big Beautiful Bill Act will for borrowers starting a program on or after July 1, 2026. While this could be seen as an effort to curtail ballooning education prices and control student debt, for many prospective students it will restrict access to educational opportunities as long as graduate program prices remain at their hefty price tags.聽
Year after year, tuition and fees continue to rise, reinforcing a system that is dysfunctional. Take a closer look at why college is so expensive and how ACE works around the clock to break the trend.
Education Loan Debt Reflects a Broken Model
Today鈥檚 financial model for higher education is showing cracks. Many institutions prioritize tuition revenue over accessibility. Not to mention, the often promised 鈥渃ollege premium,鈥� the idea that a degree guarantees higher lifetime earnings, is no longer a given.
Return on investment (ROI) varies widely depending on the school, program and student background. For too many, the average debt outweighs the long-term benefit. It鈥檚 time to rethink what we expect from higher education.
Solutions and Real Alternatives to the Crisis
Higher Ed Can Be Different: ACE鈥檚 Model
Unlike traditional institutions, ACE keeps tuition low and transparent. Most master鈥檚 degrees cost under $10,000, and Ed.D. programs average less than $25,000.1 Instead of encouraging loans, ACE makes it possible for students to pay as they go, with 86% graduating debt-free.2 That鈥檚 nearly the inverse of national trends, where most students leave school owing thousands. For more details on how ACE helps students graduate debt-free, this guide explains how to pay for college without loans.
Real ROI at ACE: A 19:1 Return
ACE鈥檚 model is as affordable as it is effective. According to labor market analytics firm Lightcast, ACE students see a 19:1 return on their investment. That means for every dollar spent, students earn back $19.20 in lifetime income. This value-first model proves that low-cost, high-impact education is possible, scalable and sustainable.
Calling on Institutions to Cut Costs
In October 2024, ACE issued a bold challenge to other institutions: Make significant strides to lower tuition. As a leader in affordability and transparency, ACE felt urging others to follow suit was an integral mission for the benefit of students across the nation.
It鈥檚 important to recognize that cutting costs isn鈥檛 about cutting corners but about rethinking bloated budgets, eliminating unnecessary expenses and focusing on student outcomes. After all, education is about providing access to significant opportunities for students, not weighing them down with crippling debt.
What If More Schools Had Followed This Path?
If more institutions had embraced this mindset sooner, the student debt crisis might look very different today. Imagine:
- Fewer borrowers facing collections and default.
- More graduates starting families, buying homes and building wealth.
- Less dependence on federal student loan debt and more financial freedom.
Generational transformation starts with smart education models. ACE proves that affordability and excellence can go hand in hand.
Where Do We Go From Here?
Fixing the student loan debt crisis requires both policy-level change and institutional reform. Schools must make financially responsible decisions to avoid passing costs along to students.
In an article for , ACE President and CEO Geordie Hyland shares some recommendations for traditional higher education instructions to consider, including:
- Ensuring that executive teams and boards of trustees are aligned on strategies that keep costs and tuition manageable.
- Centralizing curriculum models to create consistent learning.
- Surveying students regularly and using that data to make continuous improvements.
- Aligning program offerings to today鈥檚 market and employer needs.
Transparent pricing, outcome-driven programming and true affordability are no longer optional, but essential for success. Student-first models are already working. We just need more institutions to follow their lead.
FAQs: The U.S. Student Debt Crisis
罢丑别谤别鈥檚 in outstanding federal student loan debt.
With student loan payments restarting, millions face the risk of default or delinquency once again.
Title IV loans are federal loans offered by the Department of Education to help cover college costs, including tuition, fees and living expenses.
Choosing affordable, online-first schools like ACE, where tuition is transparent and students pay per term, is a smart way to reduce or eliminate the need for loans.
Advance your career without student debt holding you back. Explore 番茄视频鈥檚 affordable and fully online programs.
1All values shown are an estimated value of the cost of tuition and fees. Actual amounts may vary depending on the number of transfer credits applied to the selected program hours, the pace and satisfactory completion of the selected program, the receipt of scholarship or grant amounts, or adjustments to tuition or fees as described in the Catalog Right to Modify Tuition section. State sales and use tax will apply where required by law.
2Internal research completed in March 2025
