10 Best States to Live In for Paying Off Student Debt

best states to live in

Student loans can be stressful. Two-thirds of borrowers report physical symptoms of stress related to their student debt, including sleep loss, headaches, and muscle tension, according to our recent student debt stress survey.

The burden of student debt isn’t universally severe, however. Where college graduates attend school, live, and work can have a big impact on their student debt affordability.

Our annual student loan affordability study compares average student loan balances to costs of living and wages in each state to determine the best states to live in for student loan borrowers looking to repay their debt.

The differences between states when it comes to student loan affordability are stark. In the best-ranked state of Utah, student loans are 2.2 times more affordable than in the worst-ranked state of Hawaii.

How we ranked states by student loan affordability

To identify the best states to live in if you have student debt, we surveyed three key factors:

  • Average student loan balances for 2016 graduates in each state
  • Average annual wages for workers in each state
  • The cost of living in each state compared to the national average

Based on these factors, we calculated an average borrower’s monthly disposable income, which we used to determine the following rankings. This disposable income was the amount left over after covering basic expenses such as food, shelter, transportation, and health care.

We then compared monthly disposable incomes to monthly student loan payments for a standard 10-year repayment plan. We considered student loan payments to be affordable when they equaled 10 percent of a typical worker’s disposable income — modeled on the formulae used to set monthly payments on income-driven repayment plans for federal student loans.

Only one state met this test: Utah, where student loan payments account for 10.01 percent of monthly disposable income. A borrower living in Hawaii, by comparison, can expect to put 22.17 percent of their monthly disposable income toward student debt.

Student loans are more affordable for the 2016 class

Overall, student loans are becoming more affordable thanks to lower balances, rising incomes, and a dip in the costs of basic living expenses.

At the national level, here’s what the average student loan borrower is up against:

  • Disposable income devoted to student loan payments: 14.57 percent
  • Average student loan balance: $27,822
  • Average annual wage: $49,630

Today, student loan payments eat up less disposable cash compared to the previous year. The 14.57 percent average is a significant drop from our 2016 student loan affordability survey average of 17.3 percent.

The average student loan balance estimates for this study are based on borrowing statistics from Peterson’s data and might differ from other projections. For example, a different estimate of student loan debt puts the average 2016 graduate’s balance at $37,721.

10 best states to live in if you have student debt

Residents of the following states use a small portion of their disposable incomes — 13.50 percent or less — to cover student loan payments.

Here are the best states to live in if you’re looking to keep up with student loan payments. We’ve also included the city in each state where workers earn the highest wages based on available data.

10. Wyoming

  • Disposable income devoted to student loan payments: 13.46 percent
  • Average student loan balance: $25,378
  • Average annual wage: $46,840
  • City with highest average wage: unavailable

Wyoming made it into the top 10 this year but fell from its previous spot in the top three, mostly because of a significant uptick in student borrowing. 2016 college graduates in Wyoming left with $2,695 more in student debt compared to last year’s study.

But Wyoming graduates still have a relatively small amount of student debt. The state’s residents also enjoy comparatively high wages and low living costs.

9. Virginia

  • Disposable income devoted to student loan payments: 13.35 percent
  • Average student loan balance: $27,865
  • Average annual wage: $53,090
  • City with highest average wage: Charlottesville, $50,950

At No. 9 is Virginia, a state where student borrowing is about on par with the national average.

However, it pulls ahead thanks to stellar incomes and reasonable living costs. Virginia residents have some of the highest disposable incomes — $2,113 per month — making it easier to afford student loan repayment.

8. Nebraska

  • Disposable income devoted to student loan payments: 13.28 percent
  • Average student loan balance: $25,311
  • Average annual wage: $44,170
  • City with highest average wage: Omaha, $46,490

Then there are states like Nebraska, where student loan borrowers benefit from low living costs but can’t necessarily count on higher incomes. The average annual wage is $5,460 below the national average.

But the state makes up for it with some of the lowest living costs in the nation. It’s worth noting that student loan balances are $924 higher than the previous year, though.

7. Georgia

  • Disposable income devoted to student loan payments: 13.28 percent
  • Average student loan balance: $26,498
  • Average annual wage: $46,540
  • City with highest average wage: Atlanta, $50,720

On average, Georgia’s 2016 graduates borrowed $1,256 less than the previous year’s class, lowering monthly costs from $281 to $268 in 2016 and boosting Georgia to No. 7 this year.

6. Arkansas

  • Disposable income devoted to student loan payments: 13.17 percent
  • Average student loan balance: $23,384
  • Average annual wage: $39,590
  • City with highest average wage: Fayetteville, $44,980

In Arkansas, average annual wages are low — a full $10,040 less than the national average.

But this state jumped from the middle of the pack into the top 10 thanks to some of the lowest levels of student debt. Educational loan balances fell a drastic $2,698 from the previous year’s average student debt of $26,082.

So, along with having the third-lowest costs of living in the nation, Arkansas college graduates are among the most likely to keep up with student loan payments.

5. Texas

  • Disposable income devoted to student loan payments: 12.99 percent
  • Average student loan balance: $26,230
  • Average annual wage: $47,770
  • City with highest average wage: Houston, $52,870

Everything’s bigger in Texas — except costs of living and student debt. Both are below average and decreased year over year. 2016 college graduates in Texas will have to devote just 13 percent of their disposable incomes to student loans — compared to the 15 percent the previous year’s class paid.

And don’t forget Texas’ lack of a state income tax. Although it didn’t factor into these rankings, living in a state with no income tax is a significant boost to student loan borrowers’ bottom lines. Residents of states with no income tax save an average of $1,977 per year.

4. Colorado

  • Disposable income devoted to student loan payments: 12.99 percent
  • Average student loan balance: $26,607
  • Average annual wage: $52,710
  • City with highest average wage: Boulder, $60,390

Although Colorado has higher costs of living, it also has above-average wages. Higher pay ensures Colorado’s 2016 graduates are more likely to have enough cash to comfortably cover student loan payments each month.

3. North Carolina

  • Disposable income devoted to student loan payments: 12.46 percent
  • Average student loan balance: $24,133
  • Average annual wage: $45,280
  • City with highest average wage: Durham, $57,850

North Carolina jumped from No. 10 last year to No. 3 this year thanks to improvements across all factors that influenced these rankings.

Graduates in the 2016 class borrowed a whopping $1,512 less than last year’s graduates. Plus, annual wages increased by $1,110 from 2015, and costs of living fell slightly.

2. Washington

  • Disposable income devoted to student loan payments: 12.16 percent
  • Average student loan balance: $24,331
  • Average annual wage: $55,810
  • City with highest average wage: Seattle, $63,300

Next is Washington, which moved up from its spot as the fourth-best state to live in for student loan affordability last year. It boasts one of the highest average incomes of any state — $6,180 above the national average.

With one of the lowest average student debt balances among 2016 graduates, Washington residents should find it easier to keep up with payments. Plus, like Texas, Washington doesn’t levy a state income tax.

1. Utah

  • Disposable income devoted to student loan payments: 10.01 percent
  • Average student loan balance: $18,969
  • Average annual wage: $45,490
  • City with highest average wage: Salt Lake City, $48,850

Holding on to its No. 1 spot is Utah, the only state where 2016 graduates borrowed less than $20,000 on average. It beats out the next-lowest student loan balance by a decent margin — $2,311.

Relatively low student debt and costs of living combine to put Utah at the top of the best states to live in if you have student debt. College graduates here can more easily keep up with payments, which are just 10 percent of a typical Utah worker’s disposable income.

Full rankings: Student loan affordability by state

Here are the full rankings of student loan affordability for all 50 states and the District of Columbia. States are ordered from best to worst.

Rank State Disposable income devoted to student loan payments Average annual wage Average student loan balance Monthly student loan payment City with highest wages City’s average wage
National 14.57% $49,630 $27,822 $282
1 Utah 10.01% $45,490 $18,969 $192 Salt Lake City $48,850
2 Washington 12.16% $55,810 $24,331 $246 Seattle $63,300
3 North Carolina 12.46% $45,280 $24,133 $244 Durham $57,850
4 Colorado 12.99% $52,710 $26,607 $269 Boulder $60,390
5 Texas 12.99% $47,770 $26,230 $266 Houston $52,870
6 Arkansas 13.17% $39,590 $23,384 $237 Fayetteville $44,980
7 Georgia 13.28% $46,540 $26,498 $268 Atlanta $50,720
8 Nebraska 13.28% $44,170 $25,311 $256 Omaha $46,490
9 Virginia 13.35% $53,090 $27,865 $282 Charlottesville $50,950
10 Wyoming 13.46% $46,840 $25,378 $257
11 Florida 13.49% $44,050 $23,999 $243 Gainesville $47,560
12 Illinois 13.68% $51,500 $26,980 $273 Chicago $54,340
13 Oklahoma 13.73% $42,760 $26,068 $264 Oklahoma City $45,280
14 Alabama 13.87% $42,510 $26,065 $264 Huntsville $52,960
15 Tennessee 14.16% $42,350 $26,611 $269 Nashville $45,780
16 Michigan 14.44% $47,350 $30,289 $307 Ann Arbor $56,160
17 New York 14.48% $58,910 $21,280 $215 New York City $63,320
18 Arizona 14.61% $46,290 $26,346 $267 Phoenix $47,540
19 North Dakota 14.81% $47,130 $28,336 $287 Fargo $45,610
20 Ohio 14.83% $45,930 $29,579 $299 Columbus $48,850
21 Wisconsin 14.89% $45,240 $27,872 $282 Madison $50,830
22 Oregon 14.95% $49,710 $27,143 $275 Portland $53,960
23 Missouri 14.98% $44,620 $29,215 $296 Kansas City $48,900
24 Indiana 14.98% $42,940 $28,533 $289 Indianapolis $46,840
25 Minnesota 14.99% $51,330 $31,198 $316 Minneapolis $55,010
26 Maryland 15.09% $56,120 $27,070 $274 Silver Spring $64,210
27 Mississippi 15.17% $38,300 $26,974 $273 Gulfport $41,940
28 California 15.19% $56,840 $22,517 $228 San Jose $78,990
29 Louisiana 15.20% $41,260 $26,863 $272 Baton Rouge $44,460
30 Nevada 15.22% $44,030 $25,815 $261 Reno $45,210
31 Kentucky 15.29% $41,760 $28,934 $293 Louisville $44,270
32 Delaware 15.30% $50,930 $30,255 $306 Wilmington $54,310
33 Kansas 15.32% $43,950 $28,770 $291 Wichita $43,280
34 Iowa 15.53% $43,540 $29,288 $297 Des Moines $49,420
35 New Mexico 15.70% $44,160 $28,233 $286 Albuquerque $45,920
36 Idaho 15.79% $41,910 $29,435 $298 Boise $43,040
37 New Hampshire 16.57% $50,180 $26,452 $268 Nashua $53,990
38 South Carolina 17.08% $41,530 $29,496 $299 Charleston $44,500
39 West Virginia 17.30% $40,250 $29,922 $303 Charleston $42,890
40 Massachusetts 17.37% $60,840 $29,924 $303 Boston $67,930
41 District of Columbia 17.68% $82,950 $33,650 $341
42 Montana 17.99% $41,440 $30,994 $314
43 Vermont 18.33% $47,620 $28,739 $291 Burlington $51,600
44 South Dakota 18.51% $40,070 $30,090 $305 Sioux Falls $43,180
45 Rhode Island 18.96% $51,920 $31,497 $319 Providence $51,100
46 Alaska 19.19% $56,710 $31,217 $316 Anchorage $57,770
47 New Jersey 19.35% $56,030 $35,143 $356 Trenton $62,150
48 Pennsylvania 19.35% $47,540 $35,196 $356 Philadelphia $53,590
49 Connecticut 19.90% $57,960 $32,211 $326 Bridgeport $64,800
50 Maine 20.45% $44,180 $30,586 $310 Portland $47,770
51 Hawaii 22.17% $49,430 $25,851 $262 Honolulu $51,080

Methodology

This study compared average earnings in each state and the District of Columbia to costs of living and average student loan balances to find the states where student loan repayment is most affordable.

Average student loan balances in each state were calculated from Peterson’s data on indebtedness averages at four-year colleges. Colleges were excluded that did not report a dollar average for the average indebtedness number or if the figure was for a year before 2015.

Disposable income of an average worker in each state was calculated based on the following factors:

Disposable income was then compared to typical payments on the average student debt balance of a 2016 graduate in each state based on the following criteria:

  • Each state’s average student loan debt was amortized over a standard 10-year repayment period, assuming an interest rate of 4.00%.
  • The average payment was compared to disposable income to find the portion of disposable income need to cover these basic payments.

The study was modeled on federal standards for student loan affordability. Income-driven repayment plans set affordable student loan monthly payments at 10 percent of monthly discretionary income. However, our methodologies differ and might not be reflective of results using income-driven repayment plan formulae.

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