Some States Have Much Bigger Student Loan Debt Problems, Study Shows

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When it comes to student debt, it seems you’re much worse off in Georgia than in Wyoming — according to LendingTree’s research team, those two states had the hardest and easiest times with student loans, respectively.

As the study findings suggest, where you live helps to determine where you can go with your student debt.

To find where loans pose the greatest burden, we ranked all 50 states (not including the District of Columbia) based on three key student debt metrics: the percent of residents with education debt, the median balance per borrower and the rate of delinquency (being late on monthly payments). Here’s what we discovered:

Key findings

  • Georgia was the first of three Southern states among the top five places with the biggest student debt problem. The Peach State ranked in the worst 15 for each of the metrics analyzed, including the second-highest median debt per borrower ($24,751), with only Maryland recording a higher average balance. (Read more)
  • The seven states with the smallest student debt problem were all located in the Western U.S., led by Wyoming. Just 19% of residents there have education debt, and their average balance checked in at a modest $17,017. Wyoming ranked in among the five best (i.e., lowest) in both of those categories. (Read more)
  • The story wasn’t so straightforward for some states. Minnesota, for example, reported the highest share of residents with student loans, with about 3 in 10 residents facing repayment — yet, on the other hand, a relatively low percentage (9.2%) of Minnesota’s student loan debt is delinquent. (Read more)

Where student debt weighs heaviest

Our study showed that Georgia is facing the heaviest difficulties on the student debt front. More than 1 in 4 state residents (27%) borrowed student loans for higher education, and they owe close to an average of $25,000 apiece.

To make matters worse, about 14% of these Georgia borrowers said they were 90 days or more late on their payments, putting them at risk of student loan default. That’s significantly higher than the approximately 11% of borrowers nationwide who are delinquent on their education debt by 90 days or more.

Ranking just below Georgia were…

2. Ohio: The Buckeye State was fourth in terms of the percentage of residents carrying student debt (at 30%) and sixth for median outstanding student loan balance (at $22,828). On the other hand, Ohio’s relatively low delinquency rate of 12.1% may have kept the state from outranking Georgia on the overall list.

3. South Carolina: The state registered the fourth-highest average student loan debt balance (at $23,813) and the seventh-highest delinquency rate (at 14%). One piece of good news: 25% of South Carolinians have student debt, placing it in the middle of the pack (25th) for that metric.

Not surprisingly, these three states also had heavy student loan debt levels at the city level: Atlanta; Akron, Ohio; and Charleston, S.C., comprised 3 of the 4 places with the most student debt in 2020.

States with a lighter student debt burden

At the other end of the scale, some states have a more favorable student loan situation, with the best being that of Wyoming.

Fewer than 1 in 5 residents (19%) here have student debt to fend off, and they owe just $17,017 on average. These numbers shine in comparison to the 69% of Class of 2019 graduates nationally who borrowed an average of $29,900 for their degrees.

Wyoming residents also appear better equipped to stay current on their loan repayment — more than 9 of every 10 borrowers in the state said their repayment was on track and they had avoided delinquency.

Rounding out the three states with the lightest student debt burden were Washington and Utah, each of which ranked 40th or below for all three of the metrics analyzed.

Washington state alumni seem to be relying less on borrowing as a means for covering their cost of attendance. Their residents’ median balance of $19,075 could be held down by the fact that four of its cities — Cheney, Olympia, Ellensburg and Bellingham — ranked among the best 20 cities for students working their way through college.

Location impacts on student loan repayment

Not all states share such a black-and-white story, of course. Minnesota, for example, was 10th overall, with a country-high 30% of its residents burdened with education debt. And yet, its delinquency rate (9%) ranked 39th highest, meaning that Minnesotans do a better job than most at avoiding late payments.

Likewise, Louisiana (15th overall) showed an exceptionally high share with delinquent student loan debt (15%), but the state was buoyed by its relatively low median student loan balance per borrower ($20,270).

Future and current borrowers likely face a repayment complicated by at least some of these factors. After all, location helps to determine the cost of a degree — and the cost of living — as well as the availability of postgraduate employment.

For future college students looking to avoid unnecessary debt, consider Student Loan Hero’s tips:

  • Deprioritize public schools with the most student borrowing: It’s common knowledge that private universities tend to cost more, but you might also look to avoid expensive public institutions, particularly if you’re an out-of-state student staring at an even higher price tag.
  • Consider the most affordable small colleges: Smaller is, in fact, typically cheaper. Another popular and effective route to lowering the cost of your degree is to spend the first two years of your schooling at a local community college.
  • Exhaust every option before resorting to borrowing: Tapping into savings, taking on a summer job and aggressively pursuing scholarships and grants are all preferable to taking on debt. Unlike loans, scholarships and grants rarely need to be repaid.
  • If you must borrow, do so strategically: Federal student loans are generally recommended over private student loans because they come with more expansive repayment options, such as access to income-driven repayment plans and loan forgiveness programs. Still, a private loan or an income-share agreement could supplement those funds if you hit your federal borrowing limits.

For borrowers already saddled with student debt, our advice includes considering relocation. By moving to another, more student-debt-friendly state, you could score one of more of the following benefits to your repayment:

With that said, excelling in repayment isn’t entirely dependent on where you live or work. You could reside in any state and still be able to enroll in an income-driven repayment plan to lower the monthly payments on your federal loans. Or you could look into refinancing your federal and/or private loans to lower your average interest rate.

Published in News & Policy