State colleges and universities tend to be a lot more affordable than private ones, especially for in-state residents, and this can result in less student debt. But according to a new Student Loan Hero study, some states are a lot better at keeping their students out of debt than others.
By examining how much full-time undergraduates (excluding those returning to college) borrowed in the 2016-2017 academic year, we found out where the student loan burden is unusually high and where it’s relatively low. In fact, the data shows that student debt does vary significantly by states — and even among public colleges within the same state.
- Public college students in New Hampshire borrowed more than in any other state, with the typical first-time, full-time student taking out $7,263 — or $3,802 more than the national average. New Hampshire graduates also had the highest debt when looking just at those students who took out loans: an average of $9,946.
- But while New Hampshire had the highest overall loan total, Rhode Island topped the country in terms of the percentage of public college students with debt: 77%, compared to 50% nationwide.
- Alaska’s students borrowed less for their education than any other state: $1,638 across all first-time, full-time students. Only 28% of students borrowed in 2016-2017 — the lowest rate among all states.
- Looking at just those students with loans, none of the states could beat Washington D.C. ’s $5,294 average debt total. After D.C., California was lowest at $5,439.
- Only 6% of public college students nationally take private loans, but those loan amounts are an average 223% higher than federal loans ($12,305 versus $5,528).
Where students are borrowing the most to attend state schools
When it comes to public universities and colleges, no other state came close to New Hampshire’s debt total of $7,263 among all students. The Granite State’s student loans far outpaced average borrowings of $5,775 in Pennsylvania, and $5,622 in North Dakota.
However, if you exclude students who took no loans out at all, then the “Live Free or Die” state’s average of $9,946 isn’t too far off from $9,137 in second-place North Dakota. New Hampshire’s neighbor Vermont placed No. 3 in this metric, at $9,005.
However, the state averages don’t tell the whole story. For example, New Hampshire students who borrowed loans to attend the University of New Hampshire’s main campus in Durham, N.H. graduated $10,785 in debt. But those who opted for Granite State College in Concord, N.H. left school owing less than half that amount — $4,659.
So even though a public university can be more affordable than its private counterpart, you still need to pay attention to tuition costs within a state system, as some schools are far better at keeping their students out of debt than others.
Where students are borrowing the least
So which state university systems leave their students with the least amount of debt? Alaska students leave college relatively debt-free. For all first-time, full-time students, the average debt load was just $1,638. Among just those students who borrowed, the average was $5,759, the fifth lowest amount among all the states.
Utah ($1,846) and California ($1,977) rounded out the bottom three for overall borrowing. New Mexico — which recently announced that tuition at state institutions would be free for all state residents — had the fourth-lowest average across all students, at $2,008. The 37% of students who took on loans borrowed an average of $5,445.
But just as with the expensive states, results varied widely among the individual public schools. Alaska’s range was roughly $1,700 — the University of Alaska Fairbanks’ $6,898 versus the University of Alaska Anchorage’s $5,184. In Utah, though, the most and least expensive options differed by more than $4,800, when comparing the University of Utah ($8,997) versus Southern Utah University ($4,155)
Some states are better than others at keeping students completely out of debt
Along with digging into the amount of student loans that students are borrowing, we also took a look at what proportion of students were taking out loans in the first place.
Here, Rhode Island had the highest rate of students with debt, as 77% of its state school students borrowed to pay for their educations, followed by New Hampshire (73%) and Massachusetts (69%).
At the other end of the spectrum, Alaska’s students had the lowest rate of borrowing, at 28%, followed by Utah (30%) and Hawaii (35%).
Given that the national average coming has 50% of public college students taking out loans, the variation between the top and bottom of our ranking is significant.
Why do students in some states have to borrow more than others?
As you can see, students in some states have to borrow a lot more than others to earn their degree from a public college. One reason for this might be the amount of funding that states provide to public colleges, which in turn gets doled out as financial aid for students.
The California state college system, for instance, is relatively well-funded. As a result, it might be able to offer bigger grants and scholarships to students and thereby keep them out of debt.
But other school systems might not get as much support, which means students have to foot the bill. In fact, states have cut funding by about $2,000 per full-time student in the past 10 years, according to the State Higher Education Executive Officers Association.
Not only is financial aid not what it used to be at public colleges, but tuition costs can vary widely within the same state, as noted above with Alaska. As another example, consider New Hampshire at the top of the borrowing list: Tuition at the University of New Hampshire (Durham campus) is $15,520 per year for residents, while annual tuition at Granite State College for residents is less than half that at $7,536.
Both price tags are less than what you would see at a lot of private colleges, but they still can make a big difference in how much debt students have upon graduation.
Private student loans tend to be much larger
When it comes time to pay their tuition bill, most borrowers rely on the Department of Education for loans. In fact, only 6% of public university students in the nation turned to private lenders for student loans in 2016-2017.
But those students who do take out private student loans, borrow amounts that are, on average, 223% higher than those for federal loans ($12,305 vs. $5,528).
Students often turn to federal loans first, since they generally have lower interest rates, and then resort to private loans once they hit their federal loan borrowing limits.
Given the higher costs associated with private loans — and the data showing these loans are usually for much larger amounts — it’s especially important to shop around among different lenders if you need a private student loan.
How to avoid over-borrowing for college
In the Class of 2018, the average student left school with $29,800 in college debt. While the typical state school graduate owes significantly less than that, it’s still important to compare costs of tuition before choosing a school. Don’t just look at the sticker price, but consider all the financial aid, including loans, grants and scholarships, you’ve been offered.
Also make sure to explore your options within your state’s public college system. As this study revealed, some schools are better than others at keeping their students out of debt, even within the same state.
Before taking out a loan, use a student loan calculator so you understand exactly what your monthly payments and interest costs will be. By doing your homework now, you can avoid graduating with a burdensome amount of debt.
And once you do graduate, consider refinancing your student loans for lower rates. Although this strategy isn’t for everybody, it can help many borrowers lower the costs of their loan and pay off their student debt faster.