States with the Most and Least Student Debt

By: Adam McCann - WalletHub.com

“Location, location, location” is the most important phrase in real estate. But the mantra applies to education, too. Where you live doesn’t just affect the value of your property; it also reflects the worth of your college degree — the same degree that may have put you in debt. With 10.7 percent of all student-loan debts 90+ days delinquent or in default as of Q1 2018, graduates need to be selective with the places in which they choose to put their degrees to work. New York City, for instance, might have a high average salary for a certain profession, but the high cost of living could outweigh the gains.

Save for mortgages, student loans make up the largest component of household debt for Americans. And our collective debt keeps growing. At the end of the first quarter of 2018, total outstanding college-loan balances disclosed on credit reports stood at $1.41 trillion, according to the Federal Reserve Bank of New York.

There is evidence that income potential rises and chances of joblessness decline with more schooling. But many graduates entering the labor market are learning the hard way that a college degree can’t guarantee financial security. Post-college success depends on numerous factors, including where a graduate lays down roots. Student-loan borrowers generally fare better in strong-economy states with low college-debt-to-income ratios.

With student-loan debtors in mind, WalletHub compared the 50 states and the District of Columbia based on 11 key measures of indebtedness and earning opportunities. Our data set ranges from average student debt to unemployment rate among the population aged 25 to 34 to share of students with past-due loan balances. Read on for our findings, insight from a panel of researchers and a full description of our methodology.

Tip: If you’re considering borrowing money for college or are in danger of defaulting, we advise leveraging a Student Loan Calculator to determine an affordable monthly payment and payoff timeline.

Main Findings

Source: WalletHub

Student Debt by State

Overall Rank*	State	Total Score	‘Student-Loan Indebtedness’ Rank	‘Grant & Student Work Opportunities’ Rank
1	South Dakota	71.41	1	35
2	West Virginia	68.16	3	3
3	Pennsylvania	66.95	4	11
4	New Hampshire	65.15	2	43
5	Ohio	63.84	6	10
6	Mississippi	62.22	7	9
7	Michigan	60.28	9	12
8	Minnesota	59.13	5	49
9	Iowa	59.09	8	28
10	Indiana	56.53	10	20
11	Kentucky	55.79	17	2
12	Delaware	55.52	12	5
13	Kansas	54.07	13	18
14	South Carolina	53.93	14	16
15	Wisconsin	53.57	15	17
16	Vermont	53.01	11	38
17	Idaho	52.38	16	25
18	Montana	51.66	20	19
19	Georgia	51.40	19	23
20	Connecticut	49.63	18	41
21	Alabama	48.41	28	6
22	Rhode Island	47.77	23	30
23	Illinois	47.43	22	37
24	Tennessee	47.33	25	21
25	Nebraska	46.85	24	27
26	Missouri	46.04	21	45
27	Arkansas	45.55	30	14
28	New Jersey	45.09	26	39
29	North Carolina	44.61	33	7
30	Oklahoma	43.16	35	8
31	Maine	42.00	27	51
32	North Dakota	41.76	31	40
33	Oregon	41.64	34	24
34	Massachusetts	41.28	29	50
35	Texas	41.23	36	22
36	Louisiana	40.18	39	13
37	New York	39.05	32	48
38	Virginia	37.94	38	42
39	New Mexico	37.31	40	31
40	Colorado	37.15	37	47
41	District of Columbia	36.57	41	34
42	Nevada	35.40	43	4
43	Maryland	34.36	42	44
44	Florida	32.74	45	15
45	Alaska	31.88	47	1
46	Arizona	31.82	44	32
47	Washington	30.18	46	26
48	California	25.22	48	36
49	Wyoming	24.66	49	33
50	Hawaii	15.60	50	46
51	Utah	13.77	51	29

*No 1 = Most Student Debt

Source: WalletHub

Ask the Experts

Having more student debt than one can handle can produce significant troubles in the future. To advance the discussion, we asked a panel of experts to share their advice and insight with current and potential student-loan borrowers. Click on the experts’ profiles to read their bios and responses to the following key questions:

What tips can you offer students looking to minimize the amount of debt they take out for higher education?
Should the government reduce the amount of money students can borrow? How about basing the total amount a student can borrow on the quality of the university and employability of the degree/field?
How do we slow the growth of higher-education expenses?
How will the policies set forth by the Trump administration impact student borrowing and higher-education finance more generally?
How does the growth of student-loan debt affect the economy?
How should students and their parents think about the return on investment to spending on higher education?

Methodology

In order to determine the best and worst states for student debt, WalletHub compared the 50 states and the District of Columbia across two key dimensions, including “Student-Loan Indebtedness” and “Grant & Student Work Opportunities.”

We evaluated those dimensions using 11 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 being granted to the state with the most student debt.

Finally, we determined each state and the District’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Student-Loan Indebtedness - Total Points: 85

Average Student Debt: Full Weight (~9.44 Points)
Proportion of Students with Debt: Triple Weight (~28.33 Points)
Student Debt as Share of Income: Double Weight (~18.89 Points)
Note: This metric was calculated by dividing overall state-level student debt per borrower by median household income (adjusted for cost of living).
Share of Student Loans in Past-Due or Default Status: Full Weight (~9.44 Points)
Share of Student-Loan Borrowers Aged 50 & Older: Double Weight (~18.89 Points)
Note: This metric was adjusted for the population aged 50 and older.

Grant & Student Work Opportunities - Total Points: 15

Unemployment Rate Among Population Aged 25 to 34: Double Weight (~4.29 Points)
Underemployment Rate: Full Weight (~2.14 Points)
Availability of Student Jobs: Full Weight (~2.14 Points)
Note: This metric measures student jobs per total civilian population aged 16 to 24 in the labor force.
Availability of Paid Internships: Full Weight (~2.14 Points)
Note: This metric measures paid internship listings per total civilian population aged 16 to 24 in the labor force.
Grant Growth: Full Weight (~2.14 Points)
Note: This metric measures the percentage change (2015 vs. 2014) in state- and local-government grants per in-district and in-state undergraduate student.
Presence of “Student Loan Ombudsmen” Law: Full Weight (~2.14 Points)
Note: This binary metric measures whether Student Loan Ombudsmen law was enacted or not in a state.

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Institute for College Access & Success, Federal Reserve Bank of New York, Council for Community and Economic Research, U.S. Department of Education College Affordability & Transparency Center, Internships.com, United Health Foundation, LendEDU, The Pew Charitable Trusts and Indeed.