Understanding Student Loan Debt: 5 Key Facts & What to Do

Student loans are a catch-22. Most of us rely on them to get a college degree, which can help us earn about a million dollars more over our lifetimes than those of us without college degrees. On the other hand, the debt we've accrued can impact our financial life decades after we've graduated.

Currently, about 40 million American borrowers collectively owe $1.2 trillion in student debt. Some might say student debt is a fair trade given the income potential with a college degree, but there are some sobering facts about student loan debt that might surprise you. Here are five that could make you re-assess higher education loans.

1. Each Graduating Class Becomes More Indebted

It should come as no surprise that the level of student loan debt is rapidly rising. While in the 2003–2004 school year, only 2% of graduates carried loan burdens in excess of $40,000, by 2011–2012, that number exceeded 18%, according to the College Board. And it's likely getting worse.

In 2014, the Wall Street Journal reported that the class of 2014 was the most indebted class ever, with an average student loan debt of $33,000. But they didn't hold the title long. Along came the class of 2015 to claim that dubious distinction with an average student loan debt of $35,000. The number will likely continue to increase from year to year, with many college students getting deeper in debt before they're able to purchase their first home.

2. Student Loan Repayment Can Take Longer Than Expected

The standard repayment plan with a federal student loan is 10 years for a bachelor's degree. But unfortunately, many graduates are unable to pay off their student debt in just one decade. On average, it takes about 20 years to repay student loan debt for a bachelor's degree. And if you're on a income-sensitive federal loan repayment plan, such as Income Based Repayment or Pay As You Earn, you could also be paying for up to 25 years. (See also: 15 Ways to Pay Back Student Loans Faster)

3. There Is a High Default Rate

Perhaps you see yourself finding a job shortly after graduating and paying down your debt in no time. But life doesn't always go according to plan, and keeping up with student loan payments can be more difficult than expected. In 2012, about 35% of student loan borrowers were 90 or more days behind on their student loan payments.

Different reasons play a role in student loan default. Some graduates are unable to find work, or they end up earning less than anticipated. According to the Bureau of Labor Statistics, about 260,000 people with a college or professional degree made at or below the federal minimum wage of $7.25 per hour in 2013. This undoubtedly is frustrating for graduates who spend tens of thousands of dollars for the opportunity to get ahead. (See also: 4 Times Student Loan Refinancing Can Save You Big)

4. Student Debt Can Keep You at Home Longer

Because of high student loan debt, moving into their own apartment or buying a home after graduation is out of reach for some grads. One survey found that 27% of those with student debt move back in with their parents after graduation. If that wasn't bad enough, another survey found that the median net worth of young households without student debt is approximately seven times higher than the net worth of those with student debt. This could explain why 40% of young borrowers delay major purchases like a house, and why approximately 14% of young borrowers delay marriage. (See also: The Definitive Guide to the Pay As You Earn Federal Student Loan Repayment Plan)

5. You Can't Run or Hide From Student Loan Debt

Student loan debt can haunt you forever. You might qualify for federal student loan forgiveness after 10 years if you work in public service, but typically this is one type of debt you can't escape.

Federal loans can be discharged or canceled if you become permanently disabled or die. Some private lenders offer this provision, but not all. And if you think bankruptcy can remove the burden of student debt, you're in for a rude awakening.

It doesn't matter if you didn't complete your education or if you can't find a job, private and federal lenders eventually want their money. You can apply for a deferment or forbearance, which temporarily lowers or suspends monthly payments in the event of hardship — but payments eventually resume.

Student loans — like getting an education — are serious business. Avoid compromising your financial future by borrowing wisely.

How heavy is your student loan burden?