10 Worst States to Live In If You’re Struggling to Pay Off Student Loans

Feel like you’re scraping together just enough money to make your student loan payments each month? Are you close to missing payments — or even defaulting on your student loans?

Such student debt struggles are increasingly common. National trends show the following:

• Nearly a quarter of Direct Loan borrowers are on a income-driven repayment (IDR) plan, according to a Nov. 2016 report from the Government Accountability Office. That’s an increase of almost 150 percent from the 10 percent of borrowers on an IDR plan in June 2013.
• Student loan default rates are rising. A Sept. 2017 report from the U.S. Department of Education shows 11.5 percent of borrowers entering repayment in 2014 defaulted within three years, up from 11.3 percent in 2013.

But where a borrower lives can have a major impact on their ability to pay off their student debt, according to our new study.

If you’re a resident of one of the worst states to live in with student debt, you’re more likely to struggle to keep up with payments. See if your state is on the list.

How we ranked states by student loan affordability

Our 2017 student loan affordability study highlights the 10 states where student loan payments are least likely to be affordable. We compared states based on three key financial factors:

• The average student loan balance for a 2016 graduate in each state
• The average annual wage a worker earns in each state
• The cost of living in each state compared to the national average

With this information, we compared basic living costs to average incomes to find out how much a typical worker has left over each month. We then calculated student loan payments using the standard 10-year repayment plan.

Lastly, we ranked all 50 states and the District of Columbia to find out the worst states to live in while repaying student debt.

Here are the nationwide averages for 2016 graduates:

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

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 balance for a 2016 graduate at $37,721.

Student loans more affordable overall — but not in the 10 worst states

Like the standards set by federal income-driven repayment plans, we considered student loan payments to be affordable when they were equal to 10 percent of disposable income.

Overall, student loans are more affordable for 2016 graduates compared to 2015 graduates, according to our 2016 student loan affordability survey. In 2015, graduates devoted 17.3 percent of their disposable income to student loan payments. For 2016 graduates, the average is 14.57 percent.

However, in the 10 worst states to live in, borrowers devote anywhere from 17.99 percent to 22.17 percent of their disposable income to their student loan payments.

10 worst states to live in if you’re struggling with student debt

Not only will borrowers in these states find it difficult to pay extra on student loans, but they also might struggle to make their payments each month.

Eight of the following 10 states have higher-than-average student loan balances that exceed $30,000 as well as costs of living that exceed the national average.

That means borrowers in these states are among those most likely to benefit from switching to an income-driven repayment plan for federal student loans or refinancing student loans to lower monthly payments.

Here are the 10 states where borrowers’ finances are stretched the thinnest by repaying their student loan balances.

10. Montana

• Disposable income devoted to student loan payments: 17.99 percent
• Average student loan balance: $30,994
• Average annual wage: $41,440
• City with highest average wage: unavailable

We couldn’t find city-level income data for Montana, but workers in pretty much any part of the state can expect to make well below the national average wage of $49,630. That amounts to about $680 less in income each month.

Montana’s 2016 graduates also borrowed $4,714 more than the 2015 class, raising payments by $48 per month to $314. Overall, this brought Montana from the middle of the pack to one of the worst states live in while paying off student debt.

9. Vermont

• Disposable income devoted to student loan payments: 18.33 percent
• Average student loan balance: $28,739
• Average annual wage: $47,620
• City with highest average wage: Burlington, $51,600

Vermont again made it on the list of the 10 worst states to live in with student debt. However, the 2016 class is in a better position than Vermont’s 2015 graduates thanks to slightly lower costs of living in Vermont and higher wages that outpaced borrowing.

While 2016 graduates living in Vermont devote 18.33 percent of their disposable income to student loan payments, 2015 graduates paid even more toward debt at 20.42 percent.

8. South Dakota

• Disposable income devoted to student loan payments: 18.51 percent
• Average student loan balance: $30,090
• Average annual wage: $40,070
• City with highest average wage: Sioux Falls, $43,180

Student loan borrowers in South Dakota, like those in Montana, are saddled with low incomes and high student loan balances.

Overall, South Dakota’s 2016 graduates took out $726 more on average than the 2015 class. Despite incomes that crawled up by $1,250, South Dakota is once again among the worst states to live in if you’re struggling with student debt.

7. Rhode Island

• Disposable income devoted to student loan payments: 18.96 percent
• Average student loan balance: $31,497
• Average annual wage: $51,920
• City with highest average wage: Providence, $51,100

Rhode Island is No. 7 in this year’s rankings after being No. 5 last year. It appears borrowers in the state are putting less disposable income toward student debt: 18.96 percent compared to last year’s 22.64 percent.

That’s thanks in part to 2016 graduates who borrowed $1,423 less on average than Rhode Island’s 2015 class.

6. Alaska

• Disposable income devoted to student loan payments: 19.19 percent
• Average student loan balance: $31,217
• Average annual wage: $56,710
• City with highest average wage: Anchorage, $57,770

Despite an average annual wage that’s $7,080 more than the national average, Alaska has high living costs and student debt levels that make it one of the least affordable states. Since residents of Alaska pay 22.4 percent more than the national average for basic expenses, they have less to work with each month.

Alaska’s graduates also have some of the highest levels of borrowing: 12.20 percent higher than the average balance of $27,822.

5. New Jersey

• Disposable income devoted to student loan payments: 19.35 percent
• Average student loan balance: $35,143
• Average annual wage: $56,030
• City with highest average wage: Trenton, $62,150

It might appear that New Jersey workers get a leg up from higher incomes since they earn 12.9 percent more than the average American.

But their steep cost of living is 13.8 percent higher than the national average. Plus, after Pennsylvania, New Jersey’s average student loan balance is the highest in the nation.

Bottom line: New Jersey residents face some of the highest student debt with less money in their bank accounts.

4. Pennsylvania

• Disposable income devoted to student loan payments: 19.35 percent
• Average student loan balance: $35,196
• Average annual wage: $47,540
• City with highest average wage: Philadelphia, $53,590

With the highest average student loan balance of any state, Pennsylvania’s college graduates start out owing $7,374 more than the U.S. average. Even worse, Pennsylvania workers have to repay student debt on below-average incomes.

3. Connecticut

• Disposable income devoted to student loan payments: 19.90 percent
• Average student loan balance: $32,211
• Average annual wage: $57,960
• City with highest average wage: Bridgeport, $64,800

Connecticut’s college graduates carry the fourth-highest student loan balance in the nation thanks to significant payments of $326 per month.

Workers in this state are also up against costs of living that exceed the national average by a whopping 24.1 percent. Despite also earning higher wages, Connecticut’s student loan borrowers are in a tough spot.

2. Maine

• Disposable income devoted to student loan payments: 20.45 percent
• Average student loan balance: $30,586
• Average annual wage: $44,180
• City with highest average wage: Portland, $47,770

Maine moved from No. 6 to No. 2 this year. The state has living costs that are 10.6 percent higher than the national average and incomes that fall $5,450 short of the national average.

That means Maine residents pay higher living costs while earning less. Add an average student loan balance that surpasses $30,000, and Maine borrowers are among the most likely to struggle with student debt.

1. Hawaii

• Disposable income devoted to student loan payments: 22.17 percent
• Average student loan balance: $25,851
• Average annual wage: $49,430
• City with highest average wage: Honolulu, $51,080

The average student loan debt for residents living in Hawaii is one of the lowest in the nation, and workers earn wages near the national average. However, that’s not enough to make up for costs of living that are 34 percent higher than the national average.

High costs of living stretch Hawaii workers’ paychecks thin and leave them with far less disposable income than residents in other states, making it the worst state for student loan affordability.

How to manage student loans when you live in one of the ‘worst’ states

While borrowers living in these states are more likely to stretch their paychecks to make their student loan payments, they can take action and see results if they focus on paying down their student debt.

Here are some steps you can take if your state made this list:

• Focus on increasing your income. The more money you make, the more you’ll have to put toward your student debt. Work toward a raise or consider switching jobs to get higher pay. Starting a side hustle can be another way to bring in more cash.
• Be realistic about your spending. It’s important to understand the costs in your area and set your personal budget accordingly. Be practical and keep expenses modest when possible.
• Take advantage of federal student loan protections. With options like income-driven repayment plans, deferment, and forbearance, you can avoid missing payments or defaulting.

Getting ahead of student debt is a daunting task if you live in one of the 10 worst states — but it’s possible. Although you might have a little more working against you than the average student loan borrower, it’s a gap you can close with some extra determination and smart debt strategies.

Full rankings: Student loan affordability by state

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

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

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:

• 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 cost 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 needed 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.

Interested in refinancing student loans?

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Lender	Variable APR	Eligible Degrees
Get real rates from up to 4 Lenders at once Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Laurel Road. Laurel Road Disclosures VARIABLE APR – APR is subject to increase after consummation. 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. 2 Important Disclosures for SoFi. SoFi Disclosures Student Loan Refinance: Fixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 3 Important Disclosures for CommonBond. CommonBond Disclosures Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018. 4 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
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