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Data: 2025 High School Grads Facing $40k in College Student Loans
High school graduates this year could take on $40,000 in student loan debt to obtain their bachelor's degree.
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Entering young adulthood saddled with debt has become standard for many who want an undergraduate degree, sometimes to the tune of tens-of-thousands of dollars.
Around 45% of 2025 high school graduates will go on to a four-year college, according to NerdWallet analysis, and more than one-third of them will take on student loans to pay for their higher education. With interest rates on undergraduate federal student loans the highest in over 10 years, understanding how to best navigate college funding and loan repayment options can help these students prepare for the future.
Note: At the time of publication, developments are ongoing regarding the future of the Department of Education, university funding, some student loan repayment and forgiveness options and certain grants and scholarships. Incoming college students and their parents should rely on their respective support systems within academia for updates and guidance — these include financial aid offices, guidance and/or admissions counselors and nonprofit student help organizations.
2025 graduates could amass $40,000 in student loan debt
The average price that undergraduate students pay for tuition and fees at in-state, public four-year institutions — some of the most affordable — has been decreasing modestly since 2021, but this doesn’t mean the cost of higher education has gotten easy to bear. In fact, the current average tuition and fees at these institutions is about $11,600.
Given current average loan amounts, according to the Department of Education, and a conservative growth rate, a 2025 high school graduate could take on an estimated $40,000 in student loan debt before they graduate with their bachelor’s degree. This amount is not set in stone, however, so taking steps to minimize and prepare for it can make the transition into the post-graduate professional world much easier.
Keys to minimizing student loan debt
Choose an affordable school. Long before accepting a financial aid award, students should think carefully about which school they’ll attend, and place a high priority on a good value. Consider taking some general education requirements through a more affordable community college before transferring those credits to the institution you want to receive your bachelor’s degree from.
Maximize “free” financial aid. Minimizing student loan debt begins early by filling out the Free Application for Federal Student Aid (FAFSA) each year. The FAFSA can unlock federal student loans, need-based grants, work-study and even some scholarships. Grants and scholarships do not need to be paid back, so maximize your exposure to these options. Use a scholarship search tool like the Department of Labor’s CareerOneStop to identify college funding options that may fit your needs.
Prioritize federal loans. Dependent undergraduate students can only take out up to $31,000 in federal student loans. So given our estimated need of nearly $40,000, students may have to find an additional chunk of change. If you’re unable to close the gap with cash from work, parents, scholarships or grants, private student loans are a potential option. However, private student loans generally come with fewer protections, higher interest rates and credit checks that federal loans don’t require. Use private student loans as a last resort.
Consider making interest payments while in school. Unless your student loans are subsidized, they’re accruing interest while you’re in school. Making relatively small interest-only payments while in school can reduce the overall debt burden you graduate with.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.19-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 6/30/2025. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Variable APR
4.24-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 6/30/2025. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.19-16.99%
Lowest rates shown include the auto debit discount. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 6/23/2025. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
4.37-16.49%
Lowest rates shown include the auto debit discount. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 6/23/2025. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Borrowers are automatically funneled into what’s known as the “standard repayment” plan for their federal student loans once they enter repayment — generally after a six-month grace period. While this isn’t the only option available to them, it does limit the repayment schedule to 10 years, helping to minimize the amount of interest paid when compared to repayment plans with longer terms and lower monthly payments.
Assuming a student borrows the $31,000 maximum amount of federal loans available throughout their undergraduate career, they’d graduate owing around $435 per month under the standard repayment plan. After the 10-year period, they will have paid about $14,000 in interest on top of the funds they borrowed.
Understanding loan repayment options
Generally, there are four repayment plan types available to federal student loan borrowers, but the current status of at least one category — income-driven repayment — is in flux.
Students should stay informed of developments in the student loan space to ensure they’re taking advantage of the option that best suits their financial picture now and into the years ahead. Use the loan simulator from the Department of Education to explore these options.
The standard 10-year repayment plan generally costs the least in interest, but it can come with higher monthly payments.
Income-driven repayment plans base monthly obligations on current income and extend the repayment term to 20 or 25 years, which can be helpful if monthly payments under other plans are too steep. Further, these plans may open the door to student loan forgiveness options.
A graduated repayment plan features lower initial payments that increase every two years, making them appropriate for people who want to ease into repayment but still have their loans paid off by the 10-year mark.
Extended student loan plans stretch repayment out for as long as 25 years, but come with higher total interest costs.
No matter what plan you choose, paying off your student loan as quickly as possible translates to lower interest costs overall. For maximum impact, if you decide to make additional payments, make sure to tell your student loan servicer to apply them to your principal balance rather than toward your next month’s payment.
