(NerdWallet) — This year’s high school graduates could take on nearly $40,000 in student loan debt in pursuit of a bachelor’s degree, according to a NerdWallet analysis. And with this debt stretching across federal, parent and private loan sources, the final cost of their education will grow far beyond tuition and fees.

Today, it’s nearly impossible to work your way through college. Because of this, taking on debt for higher education in hopes of greater earning power is generally accepted as a worthwhile cost. But the data shows the amount of debt is increasing and spreading across multiple sources.

2022 college-bound grads could amass thousands in debt

A 2022 high school graduate could borrow as much as $39,500 in student loans by the time they complete their bachelor’s degree, according to NerdWallet’s projections. With 1.3 million high school graduates projected to enter a four-year college and 42% of college graduates taking on debt, this is a significant burden for young professionals entering the workforce.

The average cost of attending a four-year public university, including room and board, reached $22,700 this most recent school year, according to The College Board. Growth in these costs has (fortunately) slowed considerably over the past decade — climbing 12% from the fall semesters of 2012 to 2021 after rising 22% from the fall semesters of 2002 to 2011. But the burden of student loan debt is still significant.

During the repayment period, students who take out loans can expect to pay thousands of dollars in interest on top of the amount they borrow. Federal loans to dependent students pursuing an undergraduate degree are capped at $31,000 total. Students who max out this cap are looking at roughly $350 monthly payments and about $7,000 in interest during a standard 10-year repayment period on their federal loans alone.

And barring “free money,” such as scholarships or need-based grants, they’ll have to turn elsewhere to cover any remaining costs. Parents who haven’t been fortunate enough to amass a college fund are increasingly shouldering those costs as debt.

Parents increasingly picking up debt tab

The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has grown significantly. So has how much they’re borrowing. From 1996 to 2016, the most recent year for which this data is available, the share of dependent students relying on these federal parent loans at public four-year institutions grew from about 7% to 12%, according to the National Center for Education Statistics.

The amount they’re borrowing has also increased, more than doubling from $5,000 to $11,200 during that 20-year period.

Even parents in the lowest income brackets — where students are most likely to benefit from need-based aid — are taking on debt at an increasing rate. The share of dependent students in the lowest income quintile relying on parent PLUS loans rose from 3% in 1996 to 11% in 2016.

Parents may reason that they’re better equipped than their children to cover the added cost of borrowing, but some may think they have no choice. The Pell Grant, the largest source of need-based grant aid, has failed to keep up with the rising cost of education, or even with the pace of inflation, according to an earlier NerdWallet analysis.

The costs of these loans can be far more than the principal and interest — more than one-quarter (26%) of Americans with parent PLUS loan debt say the loans have affected their retirement plans, according to a July 2021 NerdWallet survey. And about 1 in 5 (21%) regret taking out the loan(s) in the first place.

Private student loans, also on the rise, lack protections

College students are also increasingly relying on private loans. In 1996, less than 1% of dependent students at public colleges and universities relied on private loans to cover education costs. Twenty years later, in 2016, nearly 9% did.

Private student loans can be tapped when federal student loan limits are reached and when parents can’t qualify for or don’t want to take out parent PLUS loans. But they’re missing some of the protections and benefits of federal loans.

For example, private loans generally come at a higher interest rate, lack income-based repayment options and are less forgiving when borrowers have trouble making monthly payments. In addition, private student loans weren’t included in the federal interest-free forbearance period recently extended through Aug. 31, 2022.

How families can manage costs of student loan debt

Students hoping to earn a college degree may develop a graduate-at-all-costs attitude, but being strategic and cautious about these costs could make their entry into the professional working world easier.

Maximize grant and scholarship eligibility

All students should fill out the Free Application for Federal Student Aid each year, and early. Not only does the FAFSA qualify you for federal grants and loans, but many states and institutions also use this data to determine additional potential aid. Also, keep an eye on scholarship opportunities beyond freshman year — make it an annual or biannual practice to search for scholarships and apply.

Explore work-study opportunities

Work study is a government-funded program that helps students with financial need find work, often on campus, to help pay for education expenses. Your FAFSA application will ask if you’re interested in the program, then gauge your eligibility.

Tap federal student loans

Before turning to private and even parent PLUS loans, use federal student loans. Above all, these have protections that aren’t provided by the other loan types.

Borrow only what’s needed

It can be tempting to accept all of the loans you’re allotted, but you would only be digging yourself into a deeper hole than necessary. When you receive your financial aid package from the school, only accept enough to cover your expenses.

Stick it out when the going gets tough

Repayment of student loans, no matter the type, is made easier with a higher income. And graduating with a degree makes that income more attainable. The most recent graduation rate among first-time undergraduates is 63%, according to the Department of Education, suggesting many students leave college with debt but without a degree.

If your goal is to graduate, talk to your advisor or student services department when you’re facing challenges or are at risk of dropping out. While getting a degree might not be the right decision for everyone, walking away should be done only after careful consideration of all of the implications.

METHODOLOGY

Projected college enrollment, the percentage of students who are awarded student loans and debt amounts for the high school class of 2022 were calculated using data from the National Center for Education Statistics.

These projections represent a conservative estimate as they focus on public, four-year institutions only. Private nonprofit and for-profit institutions generally have higher student loan award rates and higher loan amounts, on average, when compared with public institutions.

The average student loan amounts in the group analyzed grew 5.3% annually from 2000 to 2005, and 8% annually from 2005 to 2010. The change in loan amounts slowed dramatically from 2010 through 2019 to a rate of 1.8% year over year, which includes inflation and is the most recent data available. This analysis assumes this continued conservative growth rate (1.8%) from 2019 on.

The analysis assumes a student who takes out student loans will borrow each year of their undergraduate career.

The calculations assume a five-year undergraduate career, based on estimates of the average time required to complete a bachelor’s degree from the National Student Clearinghouse.