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College was meant to be 'good debt'. For millions of US borrowers, it no longer pays off

Soaring tuition, a shifting federal lending system and a volatile job market are eroding the returns on a degree

By LineZotpaper
Published
Read Time2 min
Student loans have long been called 'good debt,' but soaring tuition costs, changes to the federal lending system and a volatile job market are forcing a generation to question that logic. More than 42 million Americans now carry federal education debt totaling over $1.7 trillion, and the Trump administration's recent overhaul has eliminated several affordable repayment plans and slashed borrower safety nets.

For generations, borrowing to pay for college was treated as a sound investment: a degree led to higher-paying jobs and greater economic opportunity. A growing body of evidence suggests that bargain has broken down.

More than 42 million Americans now carry federal education debt, with the total outstanding exceeding $1.7 trillion. Twenty years ago, the figure was closer to $516 billion across 28 million borrowers, according to data cited by CNBC. In the same period, tuition has climbed, the federal lending system has been overhauled and the job market has become less predictable, making an undergraduate or graduate degree a riskier investment.

Public confidence has followed. A Pew Research Center study published in 2025 found that nearly 8 in 10 adults say colleges are doing only a 'fair' or 'poor' job keeping tuition affordable, and 55% gave the same rating for preparing students for well-paying jobs. Separate findings released by NerdWallet this year showed nearly 80% of Americans surveyed agreed that the federal student loan system is broken.

The safety net has also shrunk. President Donald Trump's 'one big beautiful bill' act, or OBBBA, eliminated several affordable student debt repayment plans and stripped back protections for borrowers, including the option to pause federal loan payments.

The result is a wide-ranging reassessment of whether education debt still deserves its 'good debt' label, and of who actually gets to benefit from it.

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Analysis

Why This Matters

  • More than 42 million Americans hold federal student debt, and the OBBBA law has removed several affordable repayment options along with the ability to pause federal loan payments.
  • Public trust in the value of a degree is eroding, with most adults rating colleges poorly on affordability and job preparation.
  • The shift could change how a generation decides whether to borrow for higher education, affecting household finances for decades.

Background

Student loans were long framed as a reliable investment: a degree led to better jobs, and the debt was considered worth carrying. That calculus has changed as outstanding federal debt grew from around $516 billion across 28 million borrowers two decades ago to more than $1.7 trillion across 42 million today. Tuition increases, changes to the federal lending system and a less predictable job market have made the investment riskier, prompting borrowers to reconsider the 'good debt' assumption.

Key Perspectives

[Borrowers and families]: Skepticism is widespread. Nearly 8 in 10 adults say colleges do a 'fair' or 'poor' job keeping tuition affordable, and 55% say the same about preparing students for well-paying jobs. Almost 80% of Americans surveyed by NerdWallet say the federal student loan system is broken. [Policymakers]: The legislative direction has been toward tightening support. The OBBBA law eliminated several affordable repayment plans and reduced borrowers' safety net, including the option to pause federal loan payments. [Critics and skeptics]: Those who challenge the 'good debt' framing argue the math has changed: rising balances and a volatile job market mean degrees no longer offer the reliable return they once did, and the benefits of borrowing are distributed unevenly.

What to Watch

  • Whether further repayment plans or loan forgiveness options are altered as the new law is implemented.
  • Any sign of rising borrower distress, such as falling repayment rates or growing defaults, now that pause options are gone.
  • How colleges respond to public pressure on tuition as confidence in the value of degrees continues to slide.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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