States with the Most and Least Student Debt
As the 2020 presidential election draws nearer, one of the hot-button issues for candidates is student debt. Some democratic contenders, such as Bernie Sanders and Elizabeth Warren, support the cancellation of debts. Other candidates have offered plans including refinancing options, higher grants and free community college education.
It’s not surprising that student debt has become such a high-profile talking point. After all, 10.9 percent of all student-loan debts 90+ days delinquent or in default as of Q1 2019. Save for mortgages, student loans make up the largest component of household debt for Americans. And our collective debt keeps growing. At the end of the first quarter of 2018, total outstanding college-loan balances disclosed on credit reports stood at $1.49 trillion, according to the Federal Reserve Bank of New York.
But not all states are equal when it comes to the burden of student loans. With student-loan debtors in mind, WalletHub compared the 50 states and the District of Columbia based on 12 key measures of indebtedness and earning opportunities. Our data set ranges from average student debt to unemployment rate among the population aged 25 to 34 to share of students with past-due loan balances. Read on for our findings, insight from a panel of researchers and a full description of our methodology.
Tip: 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 monthly payment and payoff timeline.
Student Debt by State
‘Student-Loan Indebtedness’ Rank
‘Grant & Student Work Opportunities’ Rank
|46||District of Columbia||31.21||44||30|
*No 1 = Most Student Debt
Having more student debt than one can handle can produce significant troubles in the future. To advance the discussion, we asked a panel of experts to share their advice and insight with current and potential student-loan borrowers. Click on the experts’ profiles to read their bios and responses to the following key questions:
- What tips can you offer students looking to minimize the amount of debt they take out for higher education?
- Should the government reduce the amount of money students can borrow? How about basing the total amount a student can borrow on the quality of the university and employability of the degree/field?
- How do we slow the growth of higher-education expenses?
- Do you agree with certain 2020 presidential candidates’ ideas on cancelling student debt? Why or why not?
- How does the growth of student-loan debt affect the economy?
- How should students and their parents think about the return on investment to spending on higher education?
In order to determine the best and worst states for student debt, WalletHub compared the 50 states and the District of Columbia across two key dimensions, “Student-Loan Indebtedness” and “Grant & Student Work Opportunities.”
We evaluated those dimensions using 12 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 being granted to the state with the most student debt.
Finally, we determined each state and the District’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.
Student-Loan Indebtedness - Total Points: 85
- Average Student Debt: Full Weight (~8.50 Points)
- Share of Students with Debt: Triple Weight (~25.50 Points)
- Student Debt as Share of Income: Double Weight (~17.00 Points)
Note: This metric was calculated by dividing overall state-level student debt per borrower by median household income (adjusted for cost of living).
- Share of Student Loans in Past-Due or Default Status: Full Weight (~8.50 Points)
- Share of Federal Student Loan Borrowers Enrolled in an Income-Driven Repayment Plan: Full Weight (~8.50 Points)
- Share of Student-Loan Borrowers Aged 50 Years & Older: Double Weight (~17.00 Points)
Note: This metric was adjusted for the population aged 50 Years and older.
Grant & Student Work Opportunities - Total Points: 15
- Unemployment Rate among Population Aged 25 to 34 Years: Double Weight (~4.29 Points)
- Underemployment Rate: Full Weight (~2.14 Points)
- Availability of Student Jobs: Full Weight (~2.14 Points)
Note: This metric measures student jobs per total civilian population aged 16 to 24 years in the labor force.
- Availability of Paid Internships: Full Weight (~2.14 Points)
Note: This metric measures paid internship listings per total civilian population aged 16 to 24 years in the labor force.
- Grant Growth: Full Weight (~2.14 Points)
Note: This metric measures the change (2016 vs. 2015) in state- and local-government grants per in-district and in-state undergraduate student.
- Presence of “Student Loan Ombudsmen” Law: Full Weight (~2.14 Points)
Note: This binary metric measures whether Student Loan Ombudsmen law was enacted or not in a state.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Institute for College Access & Success, Federal Reserve Bank of New York, Council for Community and Economic Research, U.S. Department of Education College Affordability & Transparency Center, Internships.com, United Health Foundation, LendEDU, The Pew Charitable Trusts and Indeed.
Image: zimmytws / Shutterstock.com
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