As the Fed study showed, 43% of student borrowers have less than $10,000 in debt, and 72% have less than $25,000. And the College Board shows that, in 2009-10, 56% of those graduating with a B.A. from a public college took out a loan. The average debt of these borrowers, after adjusting for inflation, was $22,000.
Is $22,000 too much debt? Paid off over ten years, monthly payments would be $217 at an interest rate of 3.4% (the current subsidized rate) or $253 (if the rate goes up to 6.8% in July, as scheduled).
Under the graduated payment plan, the initial payment would be $140. Another policy option would be to allow students to pay this debt over 20 years instead of 10, thereby cutting the monthly bill to just $126 ($168 if rates go up).
By way of comparison, Fed data show that the average new car loan is $27,000. This corresponds to a minimum monthly payment of $500 (assuming an excellent credit score, which few students have).
Meanwhile the NYT has a post about student loan horror stories–but from those who borrowed from private organizations.