Collectively, there are 7.8 million people ages 24 and younger carrying an outstanding $115.50 billion in student loan debt.
Individual borrowers in this age group are carrying an average balance of $14,807.69, according to statistics from the U.S. Department of Education's Q4 2020 data.
The average debt load is $39,351 for student loan borrowers of all ages. While that's more than double what the 24-and-younger cohort carries, this segment of borrowers still has years of interest accruing ahead of them — not to mention that many may take on more debt as they finish up their undergrad degrees and pursue additional education.
As the youngest members of the student loan population, now is the time for these Gen Z borrowers to fully understand their interest rates and what they can expect when paying off their loans in 2021 and beyond.
Know your interest rate
Whether they're still in college or recently graduated and starting their first job, borrowers ages 24 and younger haven't yet seen the full effect of how interest can significantly increase their debt load.
Generally, student loans start to accrue interest daily once the loan is disbursed. An exception to this is direct subsidized federal loans, where the federal government pays the loan's interest while the student is in college or while the loan is in deferment.
Student loans are already a sizable debt load to begin with, but balances balloon quickly when you add on daily interest.
Before you even take out a loan, look at the interest rate and calculate how much your student debt is actually costing you. Select offers a step-by-step guide on how to calculate your student loan interest payment.
How refinancing could lower the interest rate you pay
Refinancing your student loans means trading in your current loan(s) for a new, consolidated loan through a private lender. In doing so, borrowers with good credit can get a much lower interest rate.
For private student loan borrowers, this is a no-brainer option if you are paying a high interest rate. And, with rates at record lows right now, today may be an ideal time for private borrowers to consider refinancing.
Use a loan marketplace like Credible to compare the different private lenders out there. Consider choosing a refinanced loan with a fixed APR so you can lock in today's low rate with the comfort of knowing that it will stay low for your entire loan term.
We rated our top student loan refinance companies and found that SoFi Student Loan Refinancing is the best overall. With SoFi, student loan borrowers can refinance at low rates, and add a co-signer. Read our full review of SoFi Student Loan Refinancing.
On the other hand, federal student loan borrowers who have their payments and interest on freeze through at least September 2021 should not refinance at this time. The current suspension of federal student loan payments as part of Covid-19 relief efforts means your interest rate is currently set to 0%.
Once payments and interest do eventually resume, keep in mind that refinancing with a private lender removes any protections you have with federal loans, including income-driven repayment plans, deferment/forbearance options and student loan forgiveness.
Bottom line
Student loan borrowers under 25 have time on their side in both a good and bad way. Their average student loan balance per borrower is the lowest of all age groups because they are the youngest and haven't had years of interest accruing.
On the other hand, because they are the youngest, it's important they understand now how their interest rate will play a big part in how expensive their debt can become over time. The earlier you get a handle on managing your student loans, the better off you'll be.
Fixed rates range from 3.99% APR to 9.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. Variable rates range from 5.74% APR to 9.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. Unless required to be lower to comply with applicable law, Variable Interest rates will never exceed 13.95% (the maximum rate for these loans). SoFi rate ranges are current as of 5/6/26 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. You may pay more interest over the life of the loan if you refinance with an extended term.
