Financial aid can be the door toward higher education for countless college hopefuls. But for millions of graduates, that same door quietly closes behind them with the weight of student loan debt. In the United States, borrowers owe a collective as of 2022, a figure that continues to rise each year. These numbers represent real people navigating the long-term consequences of student borrowing.
While a college degree can lead to higher earnings and new career opportunities, the monthly payments, interest accrual and psychological toll of student loan debt often follow graduates well into their adult lives. It’s a financial issue just as much as it is a personal, generational and national one.
To learn more about the growing problem of student debt in the U.S., we’ll break down how student loans affect your credit score, mental health and ability to build wealth. We’ll also ask the big question, are student loans worth it? And most importantly, we’ll show how affordable, online-first institutions like ·¬ÇÑÊÓƵ (ACE) are helping students pursue their goals without being buried under debt.
Understanding the Student Loan Crisis
Student loans are a common way to finance higher education, but understanding how they work and how they differ is essential to recognizing the broader student loan problem. There are two main types of student loans: federal student loans issued by the Department of Education and private student loans from banks or private lenders. Each type has different terms, interest rates and repayment protections.
So, why is student debt a problem today? Because student loan borrowing has become the norm, not the exception. Remember that $1.77 trillion in outstanding debt in the U.S. student loan system?Well, that’s .Many students are graduating with student loan balances that rival car loans or home down payments. To help address this, the federal government recently capped GradPLUS loans through the Big Beautiful Bill to better control graduate student borrowing.
Student loans have essentially become a financial milestone of adulthood in America. But unlike other milestones, they often come with high interest rates, complex repayment options and limited forgiveness, all of which make them a persistent burden for borrowers long after graduation.
Do Student Loans Affect Your Credit Score?
Your credit score is a crucial financial metric that impacts everything from getting a loan to renting an apartment. Do student loans affect credit score performance? Absolutely. Student loans appear on your credit reports as installment loans, meaning they are repaid over time with fixed monthly payments. If managed well, they can actually help build a good credit score by contributing to a positive payment history and improving your credit mix. However, if you fall behind on student loan payments, the effects can be damaging.
- Positive effects
- On-time payments boost your credit score.
- Installment loans diversify your credit mix, which is a scoring factor.
- Negative effects
- Late payments can be reported to credit bureaus after 90 days.
- Default (typically after 270 days of non-payment on federal loans) severely damages your score and may stay on your credit report for up to seven years.
- Forbearance or deferment may pause payments, but interest can still accrue, and it won’t improve your score.
Are Student Loans Worth It?
So, are student loans worth it? The answer can potentially depend on your major, your earning potential and your total debt.
There is evidence that earning a college degree generally results in higher earnings. According to the , the median weekly salary for workers age 25 and older with a high school degree is roughly $916. Alternatively, college graduates with a bachelor’s degree earned $1,541.
However, the return on investment (ROI) isn’t equal for all students. Loans may not be worth it if:
- You attend a high-cost institution with low graduation rates.
- Your student loan repayment timeline stretches over decades.
- Your degree doesn’t lead to a stable or well-paying career.
- You end up in deferment or forbearance, accruing more interest than principal payments.
Ultimately, borrowing responsibly and choosing an affordable school with targeted career outcomes can make a difference between debt as an investment and debt as a trap.
Why Is Student Debt a Problem?
It’s important to note that the student loan problem extends far beyond finances. It affects mental health, life decisions and even the broader economy. Let’s look at some of the ways it plays out.
- Mental health burden: According to the , borrowers report higher levels of anxiety, depression and sleep disorders tied to the stress of repayment.
- Delayed life milestones: Many borrowers delay getting married, starting a family or buying a home due to their student loan balances and limited savings.
- Generational wealth impact: Student debt disproportionately affects first-generation college students and borrowers of color, widening the racial wealth gap.
- Economic consequences: Large-scale student debt has macroeconomic effects like reducing consumer spending, limiting entrepreneurship and shifting retirement planning timelines.
Student Debt at ·¬ÇÑÊÓƵ
Not all colleges contribute equally to the national debt crisis. At ACE, our approach is different.
- Eighty-six percent of ACE students graduate debt-free1 compared to the national average student debt of upon graduation.
- ACE offers quality online, accelerated programs that reduce tuition costs and eliminate traditional costs like room and board expenses.
- Our programs focus on high-demand fields like education, healthcare and business, which tend to lead to strong ROI and stable employment. In fact, for every $1 ACE students invest in their education, they receive $19.20 in higher future earnings.
- ACE students are often working professionals, and 96% of students feel prepared for their job after graduating.
ACE’s commitment to affordability, flexibility and career alignment empowers students to earn a degree without putting their financial futures at risk. We offer grants and scholarships for eligible students to further reduce the need for borrowing and support working professionals pursuing degrees. Additionally, some students may be eligible to use credit for prior learning to reduce their time to completion and cost.
How to Manage Student Loans Responsibly
Managing student loan repayment effectively can reduce stress and long-term costs. Here are some strategies to stay in control of your debt. Before default becomes a concern, consider these tips:
- Choose an affordable, high-ROI institution. Lower tuition means borrowing less up front, while programs with strong graduation rates – like ACE’s 85% – and proven outcomes help ensure your investment pays off in higher earning potential.
- Consider an income-driven repayment (IDR) plans. These plans cap monthly payments based on income and family size and may offer forgiveness after 20 to 25 years.
- Explore loan forgiveness programs. Federal options like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness can cancel remaining debt for qualifying individuals.
- Inquire about refinancing options. Borrowers with strong credit may be able to lower their interest rate by refinancing through private lenders, though they may lose federal protections.
- Avoid default. Communicate with your lender. Apply for deferment or forbearance if necessary, and always know your repayment status.
Staying informed and proactive can make a significant difference, especially when your financial future is on the line.
FAQs About Student Loans
Yes. Lenders look at your debt-to-income ratio, and high monthly payments from student loans can make it harder to qualify for a mortgage.
Yes. Federal programs like PSLF and income-driven forgiveness options are available for eligible borrowers.
Typically, they remain for seven years after the date of default or after full repayment.
Final Thoughts About Student Loans
The long-term effects of student loans are undeniable. They shape your financial future, affect your mental health and influence major life decisions, but understanding those effects and managing them strategically can help you take control of your future.
If you’re considering your next academic step, ask yourself: Are student loans worth it for the path you’re choosing? And more importantly, are there better options?
At ACE, we believe that quality education should be accessible and affordable. Explore our low-cost, career-oriented programs designed to help you achieve your goals without sacrificing your financial well-being.
1Internal research completed in March 2025
