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% 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% of monthly disposable income. A borrower living in Hawaii, by comparison, can expect to put 22.17% 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%
- 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% average is a significant drop from our 2016 student loan affordability survey average of 17.3%.
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% 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.
- Disposable income devoted to student loan payments: 13.46%
- 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.
- Disposable income devoted to student loan payments: 13.35%
- 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.
- Disposable income devoted to student loan payments: 13.28%
- 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.
- Disposable income devoted to student loan payments: 13.28%
- 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.
- Disposable income devoted to student loan payments: 13.17%
- 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.
- Disposable income devoted to student loan payments: 12.99%
- 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% of their disposable incomes to student loans — compared to the 15% 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.
- Disposable income devoted to student loan payments: 12.99%
- 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%
- 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.
- Disposable income devoted to student loan payments: 12.16%
- 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.
- Disposable income devoted to student loan payments: 10.01%
- 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% 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|
|1||Utah||10.01%||$45,490||$18,969||$192||Salt Lake City||$48,850|
|17||New York||14.48%||$58,910||$21,280||$215||New York City||$63,320|
|41||District of Columbia||17.68%||$82,950||$33,650||$341||—||—|
|44||South Dakota||18.51%||$40,070||$30,090||$305||Sioux Falls||$43,180|
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:
- The Bureau of Labor Statistics’ reported 2016 mean wage in the state, released in March 2017
- LESS basic living expenses, including housing, transportation, food, and health care, based on national Consumer Expenditure data for 2016 and adjusted for local costs of living, sourced from the Council for Community and Economic Research’s Cost of Living Index
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% of monthly discretionary income. However, our methodologies differ and might not be reflective of results using income-driven repayment plan formulae.
Maximize your student loan savings
So, you’ve saved all of this money by living in a cheaper state. But how do you get the most bang for your buck? Here are five things you can do to pay down your debt faster.
1. Make more than the minimum payment
If you have a few extra dollars in your pocket, put more money toward student loan payments. That extra cash will go directly to your principal balance, meaning you’ll pay less in interest over time and lower your overall debt.
2. Target high-interest debt first
Be strategic with how you spend your new savings. You could use the debt avalanche method, for example, to erase your debt with the highest interest rate first. Following this rule of thumb will help to decrease the amount you pay in interest overall.
3. Refinance your student loans
Refinancing your student loans is a great way to pay off your debt faster. You’ll consolidate multiple student loans into one with a lower interest rate. By doing this, more of your money will go toward paying down your principle balance.
4. Pay your loans every two weeks
To pay down your student loans faster, make a payment every two weeks instead of once per month. To do this, you’ll split your normal monthly payment into two. Oddly enough, following this strategy means you’ll make an extra payment by the end of the year.
5. Live frugally
No matter where you live, you can increase how much money you have left over at the end of the month. Create a budget that can help you lower unnecessary costs, such as money you spend eating out. Then, put those savings toward your student loan debt.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.48% – 6.25%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|