Post-college debts represent one of the biggest financial burdens to Americans. In fact, student loans make up the second highest form of household debt after mortgages, totaling a record $1.7 trillion.
But how burdensome are the individual loans? The average student-loan balance in 2020 was nearly $39,000. High balances combined with a payoff timeline that lasts into middle age force many graduates to significantly delay or forego other financial goals such as saving for retirement or buying a home. Paying back student loans has also become even more difficult during the COVID-19 pandemic, though the government has allowed temporary forbearance on federal student loans.
While we have a big student-loan debt crisis as a country, student-loan debts are more unsustainable in some places than others. To determine where borrowers are burdened the most, WalletHub compared the median student-loan balance against the median earnings of adults aged 25 and older with a bachelor’s degree in more than 2,510 U.S. cities.
If you’re considering borrowing money for college or are in danger of defaulting, we advise using a Student Loan Calculator to determine an affordable payment amount and realistic payoff timeline. In addition, you can set up a free WalletHub account to ensure your timely payments are reflected accurately in your credit report and score. Maintaining “excellent” credit will help you minimize unnecessary debt costs and pay your student loans in the fastest time possible.
Most Overleveraged Cities on Student Debt
|Percentile Rank*||City||Median Student Debt||Median Earnings of Bachelor’s Degree Holders**||Ratio of Student Debt to Median Earnings of Bachelor’s Degree Holders**|
|99||Fernandina Beach, FL||$25,886||$31,301||82.70%|
|99||Avon Park, FL||$21,213||$26,202||80.96%|
|99||Beaver Falls, PA||$21,940||$27,435||79.97%|
|99||Sun City West, AZ||$16,684||$21,250||78.51%|
|99||Hallandale Beach, FL||$24,702||$33,502||73.73%|
|99||Lithia Springs, GA||$30,665||$42,430||72.27%|
|99||Red Lion, PA||$21,689||$31,143||69.64%|
|99||Oak Park, MI||$30,583||$44,008||69.49%|
|99||College Park, GA||$28,741||$41,830||68.71%|
|99||East St. Louis, IL||$19,848||$28,923||68.62%|
|99||Laguna Woods, CA||$17,488||$25,579||68.37%|
|99||Elizabeth City, NC||$22,018||$32,276||68.22%|
|99||Lady Lake, FL||$25,316||$38,676||65.46%|
|99||North Miami, FL||$22,626||$34,570||65.45%|
*99th Percentile = Most Overleveraged
**”Bachelor’s Degree Holders” refers to adults aged 25 and older with a bachelor’s degree.
With tuition rates and other college costs rising every year, many parents struggle to finance their children’s college education. As a result, many students take on debt or forgo post-secondary education altogether. For advice on how to afford college and insight on the impact of student loans on the economy, we asked a panel of experts to share their thoughts on the following key questions:
- What are the most common mistakes people make when financing their post-secondary education?
- What should people consider when applying for student loans?
- What steps should someone take if they find they cannot afford their student-loan payments?
- What impact, if any, does the large and growing amount of outstanding student-loan debt have on the economy as a whole?
Ask the Experts
In order to determine the cities where residents are most overleveraged on their student-loan debts, WalletHub divided the median student-loan balance (based on TransUnion data from September 2020) by the median earnings of adults aged 25 and older with a bachelor’s degree in more than 2,510 U.S. cities. Our sample considers only the city proper in each case and excludes cities in the surrounding metro area.
We then assigned 100 points to the city with the highest ratio of student debt to earnings and 0 points to the city with the lowest. For the cities in between, we linearly extrapolated between the two extremes.