The U.S. isn’t the only place in the world where students have to take on loans to go to college. Examining student debt by country can be very instructive, as some places are very creative when it comes to tuition and how they address paying back student loans.
For instance, did you know that borrowers in Canada and England don’t begin repaying their education debt until they’re earning a substantial income? Or that Germany and Sweden don’t charge college tuition in the first place?
Let’s review how the U.S. compares to other countries when it comes to student loan debt, repayment processes and college expenses.
Examining the approach to student loans in different countries could be a great way to find inspiration for our own student loan reform here in the U.S. A good starting point might be considering the cost of college by country. When tuition is lower, the thinking goes, borrowing should be too.
Here’s a look at how the U.S. compares to other countries when it comes to the number of students, cost of tuition and the average student loan debt.
|Country||Number of students||Average public university tuition (U.S. dollars)||Average student loan debt (U.S. dollars)||Notes|
|Canada||2.18 million||$5,172 per year||$20,632 (median)||Repayment Assistance Plan available|
|Australia||1.1 million||$10,429 to $22,937 per year||$16,189||Automatic income-based repayment|
|France||2.7 million||$396 to $3,932 per year||Not available||Low tuition|
|United Kingdom||2.75 million||$7,256 per year||Over $54,000||Automatic income-based repayment|
|Germany||2.8 million||Free (though some fees may apply)||Not available||No tuition|
|United States||19 million||$25,290 (in-state); $40,940 (out-of-state)||$28,400||Income-based repayment on request|
Based on currency conversion rates for June 15, 2022.
The solutions to America’s student loan debt problem, however, will need to keep in mind the pain points that are specific to our country — after all, the nations above all have much smaller populations than the U.S. does.
Finland, Germany, Iceland, Scotland and Sweden are among the places that don’t charge college tuition, though that often depends on whether you’re a resident or an international student.
But that doesn’t mean student loans are obsolete there: Germans, for example, make debt available for students attending private universities. Swedes, meanwhile, still take out education debt for off-campus expenses. Still, lower costs generally equate to lower rates of borrowing.
Even in places where there’s an actual cost of attendance, like Italy and France, fees are relatively low, lessening the need for taking on debt.
How America compares: There is no such blanket coverage for U.S. students, but the Education Department does offer the Federal Pell Grant program. When combined with state grants, as well as private and school-issued scholarships — a Pell Grant keeps fees low, at least for low-income students.
Free college does exist in limited form, depending on where you aim to attend. New York, for example, became the first state to offer free in-state college options for families below a given income level — plus, individual schools (including Harvard) are tuition-free for select students.
Australia is often held in high regard internationally for its approach to loan repayment. But the country also employs a novel approach to pricing college in the first place.
Some courses of study are also likelier than others to make students eligible for non-loan government subsidies.
How America compares: Although not offered by the Department of Education, income-share agreements (ISAs) are slowly gaining popularity. With such arrangements, students agree to pay a percentage of their future income in exchange for partial or full tuition funding. Purdue University in Indiana is among the schools offering ISAs to students (see our guide to ISA schools here). Unfortunately, however, not all careers are good fits for ISAs, and the model has drawn some criticism.
In many countries, students who leave school with debt don’t begin repaying that debt until they earn sufficient income. And even then, the borrower’s monthly dues are capped as a percentage of their earnings.
Consider the following countries, where borrowers only submit payments if they’ve earned a minimum income:
|Country||Minimum annual income (U.S. dollars)||Maximum payment||Payment method||Forgiveness of remaining balance|
|Australia||$32,638 (for 2021-22) and $33,565 (for 2022-23)||1% to 10% of income||Tax deduction||None|
|Canada||$19,317 (for a single person)||20% of income||Manual||After 15 years|
|England||$24,367||9% of income||Payroll deduction||After 25 to 30 years|
Based on currency conversion rates for June 15, 2022.
Borrowers are often automatically enrolled in these repayment plans, so unlike in the U.S., they don’t have to worry about red tape when facing economic hardship.
How America compares: In the U.S., federal loan repayment kicks in at the end of a student’s six-month grace period. Stateside students can enroll in an income-driven repayment plan (IDR) and possibly qualify for a $0 payment, but only after the filing the necessary paperwork. They’d also need to recertify their eligibility for the plan with their loan servicer each year.
Borrowers in America could also complete an application for an Unemployment Deferment, postponing payments for up to three years. Unfortunately, this method would cause interest to accrue on the balance of their student debt, except for direct subsidized loans.
As of April 2022, the collective outstanding U.S. student loan debt is $1.75 trillion, — $440 billion more than the collective total of U.S. auto loan debt. Here are some of the details…
Student debt during the Covid pandemic
While federal student loan payments were placed on pause during the Covid pandemic, the U.S. Department of Education is considering strategies like debt forgiveness in the amount of $10,000 per borrower, depending on their income.
This may be a relief to many borrowers as an April 2022 Student Loan Hero study showed that 72% of borrowers aren’t ready to pick their student loan payments back up.
Many borrowers were economically impacted by the COVID-19 pandemic and still have not financially recovered. In fact, 52% of those with student loans are putting that money toward basic needs such as rent and groceries instead.
Borrowing for college in the U.S.
To access federal financial aid, college students need to fill out the Free Application for Federal Student Aid (FAFSA). This can give them access to grants and loans that may make it possible for them to afford college.
Between 2010-2011 and 2019-2020, college tuition in the U.S. rose 26% at public and private colleges. This has increased the need for students to access more financial aid to cover the costs of not just tuition, but room and board as well as other expenses.
On average, here’s what students pay per college credit hour:
- $158 for two-year public, in-district schools
- $448 for four-year public, in-state colleges
- $1,148 for four-year public, out-of-state colleges
- $1,586 for four-year private, nonprofit colleges
Which countries have the most student debt?
Out of the multiple countries we examined, the United Kingdom and the United States hold the record for the highest average student loan debt. In England, students graduate with an average student loan debt of over $54,000, while in the U.S. students have an average of $28,400 at graduation.
Which countries have no student debt?
In Finland, Germany, Iceland, Scotland and Sweden, students may be eligible for free tuition. However, in some cases, you may need to be a citizen of that country in order to qualify for free tuition. For instance, in Scotland, tuition is covered by the Student Awards Agency for Scotland (SAAS), but you must be from Scotland in order to be eligible. You should also keep in mind that just because a country offers free tuition, it doesn’t mean you won’t have to pay other expenses, such as fees.
Which U.S. states have the most student debt?
According to Student Loan Hero data, those states with the largest average federal student loan debts can be found in the South:
- District of Columbia: $55,220
- Maryland: $43,165
- Georgia: $41,913
States with the least amount of student loan debt is in the Midwest and West:
- North Dakota: $29,481
- Wyoming: $30,246
- Iowa: $30,751