For decades, student loans were considered to be “good debt” and something that would ultimately lead to higher-paying career opportunities and more long-term financial stability. However, due to the rising cost of higher education, changes to federal loan systems and the current job market, many borrowers are beginning to beg the question: Are student loans actually paying off?
According to a report from the Education Data Initiative, student loan debt in the United States is nearly $1.9 trillion across nearly 43 million borrowers, a staggering figure that is up from $516 billion and 28 million borrowers just 20 years ago. However, while the number of borrowers continues to increase, so does skepticism about whether taking on education debt actually has benefits. The rapid implementation of artificial intelligence is impacting the job market drastically, specifically entry-level opportunities, making it harder for new college graduates to find employment, and therefore increasing the challenge of paying off the student loan debt accumulated to ideally alleviate the issue of finding a job.
An article from CNBC recently highlighted four key factors that have increased the financial liability for borrowers.
The increased cost of higher education
It is no secret that college education has significantly increased over the past several decades. The CNBC article highlights a 2026 report from J.P. Morgan Asset Management that shows tuition has risen approximately 5.5% per year since 1983, outpacing both inflation and wage gains. As both the cost of living and higher education continues to increase while wages stay relatively stagnant, this makes paying back student debt that much harder on borrowers.
Student debt is following borrowers for longer
With increased costs across the board, many families are looking to student loans and other sources of funding to get by. In just a decade, the average student loan balance across all borrowers has increased by 34%, from $30,414 to $40,768. Significantly, the number of borrowers with more than $100,000 in student debt has grown from 2.4 million to 3.8 million.
Larger balances tend to take longer to pay off, so many individuals with student debt are having a harder time achieving other financial milestones in order to tackle student loan debt. CNBC reported that the number of people over the age of 50 with student debt has increased to nearly 10 million people, up from 7 million in 2017.
New repayment plan rules
Federal student loan repayment timelines under President Donald Trump’s One Big Beautiful Bill Act (OBBBA) have only exacerbated the issue of individuals carrying debt for decades by eliminating repayment plans that offered 20- to 25-year plans and shifting to plans with 30 years of repayment.
The Trump administration’s overhaul of repayment plans offers fewer affordable plans and relief options, especially for those experiencing unexpected financial difficulties, as the Unemployment Deferment and Economic Hardship Deferment options were eliminated under the OBBBA.
Employment uncertainty
Even if individuals decide to take on student debt as a means to fund higher education, the rapidly changing job market and the rise of artificial intelligence is making a college education look increasingly risky to potential borrowers. Since 2023, job openings for entry-level positions have plummeted by 35%, and nearly two-thirds of students polled being pessimistic about the job market, according to a CNBC and SurveyMonkey Quarterly AI and Jobs Survey.
The unemployment rate has increased for recent college graduates, reaching 5.7% in June 2026, up from 4.9% in 2025, showing that despite both the financial and mental effort put in to getting a college education, the results are less promising than before.
While it is not uncommon to have student debt in this day and age, many borrowers may be struggling to understand how to balance their debt and improve their financial situation following graduation. In some cases, the culmination of financial factors and unstable employment can result in financial uncertainty and fear around next steps. The team at Sader Law Firm is here to help you navigate your situation and consider if filing for bankruptcy might be the right path for you. Contact us at (816) 561-1818 for a free phone consultation and to learn more.