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As national university decision day approaches, affordability is a top concern for most students and their parents.
About 46% of high school graduates in 2026 will attend a four-year college or university, according to a new report from NerdWallet. Many of them take out student loans to cover their living expenses.
By the time they graduate from college, these students can borrow an average of $43,000 in federal and private aid to earn a bachelor’s degree, up from $40,000 a year ago, according to a NerdWallet analysis of data from the National Center for Education Statistics.
The main reason for the increase in student debt is the rising cost of college.
Tuition costs have risen an average of 5.6% a year in recent decades, outpacing inflation and other household expenses, and are still rising about 5% a year, according to a report from JPMorgan Asset Management.
As a result, more schools are approaching the $100,000 annual cost threshold, according to data from the Princeton Review.
In most cases, families cover about half of college costs from income and savings. Sallie Mae’s annual report, How America Pays for College, found that free money in the form of scholarships and grants accounts for more than a quarter of the cost, with student loans accounting for most of the rest.
Roughly 42.8 million Americans currently hold $1.696 trillion in federal student loans, and more than 1 million high school graduates will take out new education loans in the coming months, according to higher education expert Mark Kantrowitz.
“This year’s high school graduates are facing changes in many ways when it comes to paying for college,” NerdWallet lending expert Kate Wood said in a statement. “As an example, federal student loans taken after July 1 will have new repayment options.”
In fact, there are fewer repayment options and stricter rules regarding debt forgiveness than before.
The federal lending changes follow President Donald Trump’s “big, beautiful bill” passed last July. Starting this year, the law will also cap the total amount of federal loans a student can take out, with new borrowers having a lifetime limit of $257,500 on all federal student loans.
“While the changes introduced by the OBBBA Act will reduce the amount of federal student loans taken out by parents and graduate and professional students, they will not reduce the number of borrowers,” Kantrowitz said in an email. “Private student loan borrowing will increase due to lower annual and aggregate loan limits.”
Once federal grants and scholarships are exhausted, private student loans can fill the gap, but their interest rates tend to be higher than federal loans. In general, experts recommend limiting personal borrowing as much as possible.
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