Average Loan Indebtedness: Definition and What It Is
Average loan indebtedness is the mean amount of student loan debt held by borrowers at a given point in time, often measured at graduation or program completion. It is most often used as a benchmark figure to compare debt loads across institutions, degree types, or graduating classes.
The figure can be reported per borrower or as a share of all graduates, including those who borrowed nothing. An institution that reports a low average debt per graduate may be averaging in a large number of students who paid out of pocket, which can make the debt picture for actual borrowers less visible.
Why it Matters
Average loan indebtedness gives prospective students one data point for evaluating whether a program's debt load is realistic relative to expected earnings. But averages can obscure a lot. A borrower who graduates with $85,000 in debt from a program where most peers borrowed $30,000 will not find much comfort in the average.
It is also worth noting that average figures typically include only federal loan data, which is tracked centrally through the National Student Loan Data System (NSLDS). Private loan balances are often not included, which means the true average debt for borrowers at some institutions is higher than published figures suggest. For context on how student debt relates to financial health, Yrefy's survey on debt and financial freedom offers real borrower data.
Example
A university reports that its graduates carry an average of $28,000 in student loan debt. That figure covers all graduates, including those with no debt. Among students who actually borrowed, the average is $41,000. A borrower using the published figure to plan post-graduation finances would be working with an incomplete picture of what typical debt actually looks like for people in their situation.
