The topline:
- One-third of undergraduate survey respondents said they use student loans to pay for their education
- One in four college students say their debts are “unmanageable”
- Nearly one-quarter of students use Buy Now, Pay Later (BNPL) borrowing services
- Just under nine in 10 students who use credit cards report using them to pay for basic needs
Student loans have long served as an avenue for students to self-finance their education, helping provide an economic boost to propel students toward socioeconomic mobility and a family-supporting wage.
As college costs rise, so have borrowing habits, with more students relying on short and long-term loans to provide financial stability. Student loan debt in the U.S. amounts to over $1.7 trillion dollars across 44.7 million borrowers, according to Federal Reserve data.
Trellis Strategies’ Fall 2025 Student Financial Wellness Survey found one-third of respondents are using student loans to finance their education, with 42 percent of four-year students using loans. An additional 14 percent of students said they use their credit cards to pay for college.
While student loans can open the door to education, students are accumulating debt to cover basic essentials and support their families, in addition to paying tuition. For some, this can feel like a risky gamble on their future financial wellbeing.
One respondent to the SFWS wrote their college experience is marked by “the feeling of uncertainty” due in part to “taking on debt to earn a degree without being certain that you will find a job in your chosen field that pays enough to cover living expenses and loan repayment.”
Why Do Students Take Out Loans?
Respondents to Trellis’ 2024 Student Financial Wellness Survey outlined various ways they applied their student loans to support their educational attainment, including working fewer hours while enrolled and addressing the high cost of living near campus.
“I quit my job so that I could focus on school, and [my family is] trying to live on my student loans while I work part-time,” a two-year student shared. “My children are still young, and I hope that they won’t remember how lean our resources are right now.”
In Trellis’ survey, two-thirds of student loan borrowers said they worry about being able to afford their monthly expenses, significantly higher than the total survey sample.
“My student loans help subsidize the increased cost of living in the area with my family of four,” a four-year respondent said, noting that childcare is double in their college town compared to their hometown.
Some respondents indicated they took out loans because they felt they had no other option to pay for school or were unaware of other avenues to afford their degree. This sentiment was more common among four-year respondents, who often face higher tuition rates compared to their two-year peers.
What Other Forms of Debt Do Students Hold?
In addition to student loan debt, many college students hold other forms of debt, with only 21 percent of fall 2025 SFWS respondents saying they were debt free. One-quarter of respondents said their total debt was “unmanageable.”
Over half of students reported using a credit card, but 40 percent of these students indicated they do not fully pay off their balance every month, which could put them at risk for high interest rates and diminished credit scores, hurting their long-term financial security and success.
Eighty-eight percent of students who use credit cards reported using them to pay for basic needs, including food, transportation or housing.
“My husband works, but including our rent, utilities, food, tires for cars, gas, vet bills, [etc.], he cannot keep up,” one respondent wrote. “We have a massive amount of credit card debt now because I’ve been in school and we’re just trying to get by.”
A significant number of students also use short-term debt products, including pay day loans (5 percent), auto title loans (7 percent) and Buy Now, Pay Later services (23 percent).
Two-year students were more likely to say they use Buy Now, Pay Later or pay day loans, compared to their peers, and parenting students were significantly more likely to use BNPL, compared to the total student population.
What Do New Federal Loan Limits Mean for Students?
Recently implemented federal regulations on loan borrowing limitations could impact student borrowing, shutting out some students from federal loans or certain academic programs at their institution based on their ability to finance their education.
Congress’ One Big Beautiful Bill has created new limitations on student borrowing, capping student loans at $257,000 across the student’s lifetime (with the exclusion of parent PLUS loans). Students who are enrolled less than full time will face a lower borrowing ceiling per academic year, as will students in academic programs that are deemed less lucrative in post-graduate earnings.
These regulations may hurt students furthest from opportunity—including parenting students, working students, students ages 25 and up or first-generation students—who are more likely to be enrolled part-time and less likely to have comprehensive college guidance support.
A lack of federal loans could also push students to turn to private borrowing markets with less favorable interest and repayment terms, impacting their financial health and long-term socioeconomic mobility. Not all students will qualify for private loans based on their credit scores, and these loans often have fewer borrower protection.
Read more of Trellis’ insights on student borrowing among Modern Learners here.
Ashley Mowreader is a freelance data journalist. Previously, Ashley worked for Inside Higher Ed, covering barriers to student success nationally, with a focus on evidence-based solutions. She holds a bachelor’s in journalism from Pepperdine University and is currently pursuing her master’s in journalism from the Craig Newmark Graduate School of Journalism at CUNY.