By Heather Brown

MINNEAPOLIS (WCCO) — Many Americans feel the burden of student debt. According the Federal Reserve Bank, it now totals $1.6 trillion. That’s behind mortgages, but ahead of total credit cards debt and car loans in the U.S.

That $1.6 trillion is also more than a 200% increase over 15 years. In 2006, student debt in the U.S. totaled $480 billion.

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So, how did we get here? Good Question.

“This is not something that all of the sudden just happened,” says Joyce Serido, a family finance researcher at the University of Minnesota. “It didn’t happen because young people were being irresponsible, though maybe some were. It didn’t just happen because colleges are raising tuition, although the costs are going up.”

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Serido first points to changes at the federal level in the 1990s that made student loans more accessible and easier to get. The idea was to make college available to more students who, in the past, weren’t able to attend as states were providing less funding to colleges and universities. It worked, and more people went on to attend secondary education.

“Everyone was thinking — no problem, you could get a college degree, you get a good job and you pay it back,” says Serido. “And then the financial crisis in 2008 hit and many students graduating were not able to find a job.”

That made it tougher for people to pay back those loans.

“I think the main driver in recent years has been that the federal program have added income based repayment options, which are helpful to borrowers which can lower and monthly payment or eliminate the monthly payment through financial hardship,” says Kevin Walker, founder of “But, what happens if they’re not paying sufficient payment to cover the interest costs on the loans.”

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Walker says what interest is then capitalized into the principal the person has to pay and the cost of the loan balloons.

Right now, 43 million Americans have some sort of student debt. That’s one in every six American adults and two-thirds of people ages 18 to 29.

Both Walker and Serido says that there are many reasons for the increasing debt beyond more people going to college, rising tuition, and the way the interest rate works for student loans under the income-based repayment option.

The Brookings Institute also points to more parent borrowing and more loans taken out to go to non-profit schools in the early 2000.

The average undergrad borrower’s debt is $29,000. For graduate students, it’s $66,000.

Sandy Baum, a student debt expert at the Urban Institute, says it’s important to point out that graduate school debt has been pushing the big increases in overall students debt over the past five to seven years. Undergraduate student debt has remained relatively stable during that time.

Baum also says that it’s important to look beyond the averages. She says 1/3 of the borrowers hold an average of less than $10,000. That’s important to acknowledge in the discussion about student debt cancellation and who it would help.

“We didn’t get here overnight,” says Serido. “It took us a good 30 years to get here, so any solution to get us out of here is going to be complex and delicate moving forward.”

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Heather Brown