Where Students Are Taking on the Most Student Loan Debt

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When you repeatedly hear, perhaps from politicians running for office, about America’s $1.56 trillion student loan debt, you might think that every state in the union is suffering in equal degree. But that’s not how it is.

Students in Washington D.C., for example, take on roughly twice as much education debt per year than their peers in North Dakota, according to our review of 2016-2017 federal loan disbursements.

Plus, when you compare a state’s average federal loan disbursement (the amount extended in loans) to its average annual salary, you’ll see that borrowing is a better proposition in some places than it is in others.

Key findings

  • Average student loan disbursements were higher in places with a higher cost of living: Washington D.C. took the top spot with an average disbursement of $17,770. California ($13,823) and Maryland ($13,161) rounded out our top three.
  • The average disbursement per student increased year over year in all but one state, Vermont, which was down 0.2%. Across all states, however, the average increase in disbursements jumped by 3.1%. Washington D.C. saw the largest increase at 6.5%.
  • North Dakota students, who borrowed just 49% of what their D.C. peers took out for the 2016-2017 academic year, generally see the largest potential payoff. In 2017, the state’s median worker holding a bachelor’s degree earned $50,270, or 5.73 times the average student loan disbursement ($8,777). Minnesota tied for first in this category, and Nebraska ranked third with a ratio of 5.59.
  • On the flip side, Vermont (3.65), Washington D.C. (3.66), and Florida (3.9) take on the most student debt relative to potential future earnings.

5 states where students take on the most federal loan debt


Here are the five states where students borrowed, on average, the most federal (not private) loans during the 2016-2017 school year:

1. Washington, D.C.

Average disbursement: $17,770

The nation’s capital recorded the fourth-lowest number of borrowers — above only Vermont, Alaska, Wyoming — and yet students there relied more on loans than in any of the states in the union. It wasn’t exactly a competitive race to the bottom, as none of the states cracked even the $14,000 mark for average borrowing amount per student.

D.C. being atop this list shouldn’t necessarily come as a shock: Seven of its eight universities are private schools with pricey attendance costs.

2. California

Average disbursement: $13,823

Despite California’s broad offering of grant programs, it had the highest number of student loan borrowers — almost 700,000 — of any state we reviewed,though it also has the highest population of any state. In California, 1 of every 2 college students will leave school in the red, according to The Institute for College Access and Success (TICAS).

A student who borrowed this average disbursement each year of a four-year degree program would graduate having borrowed more than $55,000.

3. Maryland

Average disbursement: $13,161

Students attending school in D.C. neighbor Maryland ranked third-highest in average amount borrowed for the 2016-2017 academic year. About 167,000 students borrowed a total of approximately $2.2 billion to foot the bill for higher education.

However, one factor could decrease the state’s dependence on loans in future years: The acclaimed Johns Hopkins University in Baltimore recently adopted a “no student-loans policy.”

4. New York

Average disbursement: $12,950

New York, the third of three Eastern states in our top five, came ever so close to eclipsing the $13,000 mark as well. More than 500,000 students, many in the Big Apple, took out almost $6.5 billion worth of federal loans for a single year of college or university.

All told, 3 out of every 5 New York students leave school with an average education debt of $30,931, according to TICAS.

5. Illinois

Average disbursement: $12,941

Illinois easily became the highest-ranking Midwestern state on our list. (Its closest regional rival, Michigan, came in 22nd place with an average $10,930 disbursement.)

Illinois’ average disbursement grew by 3.7% when compared with the $12,474 average disbursement recorded for the 2015-2016 school year.

5 states where student loan borrowing compares favorably with salaries


Taking out a relatively large sum in federal student loans can at least be rationalized when the borrower uses their education to further their career. The more income they earn, the easier time they should have during loan repayment.

To determine the five states where borrowing is a better proposition, we divided the local median earnings for bachelor’s degree holders by the average size of loan disbursements. The higher the resulting ratio, the better.

Unsurprisingly, none of the five states that rely on federal loans the most (as listed above) made this top five too.

1. North Dakota

Ratio of income to loan amount: 5.73

College graduates residing in North Dakota aren’t paid sky-high salaries, but their lack of serious student loan debt helped land the state in a tie for first place.

Students borrowed a country-wide low of $8,777 on average for the 2016-2017 school year. Meanwhile, degree-holders earn a median annual wage of $50,270, although this is below the nation’s median of $51,303.

2. Minnesota

Ratio of income to loan amount: 5.73

Minnesotans relied more heavily on federal loans ($9,838 per student) than North Dakotans in 2016-17. Nearly 7 of 10 students in the state left campus with education debt, according to TICAS.

Still, Minnesota rose to the top of this list thanks to the state’s employed college grads earning a better-than-average yearly salary of $56,347.

3. Wisconsin

Ratio of income to loan amount: 5.59

Minnesota next-door neighbor Wisconsin came in third, as the nearly 168,000 students who borrowed an average of $9,145 for the 2016-2017 school year have at least solid salary prospects. Residents with a bachelor’s degree or higher earn a median income of $51,162.

4. Massachusetts

Ratio of income to loan amount: 5.38

With the third-highest median annual earnings for bachelor’s degree-holders, at $62,167 — behind only D.C. ($65,056) and New Jersey ($63,545) — Massachusetts rode its wage strength to this No. 4 spot.

Salary more than made up for the extensive federal loan borrowing of students in the state. Massachusetts students registered the 13th-highest average borrowing amount in 2016-17, coming in at $11,549.

5. Alaska

Ratio of income to loan amount: 5.23

With below-average borrowing and above-average median earnings for college graduates, Alaska worked its way to fifth on our list.

About 12,900 Alaskan students borrowed an average of $10,876 from Uncle Sam in 2016-17. Their predecessors who have since turned pro in the workforce are earning a median salary of $56,914.

Consider how your location affects your student loan debt


If you’re already out of school or almost done, you might be interested to know where your home state ranks in student loan debt. But let’s face it, that information isn’t especially useful.

You’ve already borrowed, and it’s too late to undo that. You might also be too entrenched in a career, unable to switch to a higher-paying field that would ease your loan repayment.

Keep in mind, however, that moving to someplace new could help end your debt more quickly. Consider these three possibilities:

  • Enjoy a new state’s lower cost of living, and dedicate the extra room in your budget to extra loan payments.
  • Benefit from a no-income-tax state, especially if you can keep or increase your salary level from your previous home state.
  • Work in an underserved area of the country as part of one of the loan repayment assistance programs available for various professionals, including teachers and healthcare practitioners.

Although interviewing for jobs in other states is rarely easy, it could pay off. You might find yourself in a locale that offers a higher average salary for degree-holders, such as D.C., New Jersey or Massachusetts.

A raise wouldn’t only give you more breathing room in your budget — it could also pave the way toward other repayment strategies, including student loan refinance. With a higher income, you could decrease your debt-to-income ratio enough to qualify for lower interest rates on a refinanced loan, for example.