With the average student loan debt reaching $37,000 per borrower, a new report on “2021’s States with the Most and Least Student Debt” shows which U.S. states lead the pack.
To determine the states that are friendliest toward student-loan debtors, WalletHub compared the 50 states and the District of Columbia across 11 key metrics. The 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.
For instance, here is how California ranks and is listed as the third third state with the least student debt:
Student Debt in California (1=Most; 25=Avg.):
- 48th – Avg. Student Debt
- 44th – Proportion of Students with Debt
- 48th – Student Debt as % of Income (Adjusted for Cost of Living)
- 37th – % of Student Loans Past Due or in Default
- 21st – Grant Growth
Some experts in the field shared their views and opinions about the important survey.
What tips can you offer students looking to minimize the amount of debt they take out for higher education?
“One way to drive down costs and thus reduce debt is to start at a two-year college. However, if your grades and career objectives lead you to a four-year college you might think of taking some electives at a two-year college instead. Just must be sure the credits will transfer. Another cost reduction strategy is to choose in-state colleges over out-of-state ones. Tuition is a lot cheaper for in-state students,” said William Elliott III, a professor at the University of Michigan.
Should the government reduce the number of money students can borrow? How about basing the total amount a student can borrow on the quality of the university and the employability of the degree/field?
“Student debt should of course be reduced, but student debt at any level must be linked to an individual’s income and ability to pay it back. This is how student debt is managed in a country like Australia, and the U.S. ought to follow that model. But even more important, we need to drive up college readiness and college completion rates, so student debt is less burdensome. These rates are far too low and can be increased, by allowing more students the ability to complete college courses while on the high school registers and aligning high school and college course work to eliminate the need for costly and ineffective non-credit-bearing remedial courses,” according to Stanley S Litow – a professor at Duke University; and adjunct professor at Columbia University.
“The federal government should help students pay for college with more financial aid alternatives to student loans. For example, the federal government should increase the size of Pell Grants and make them available to more working-class and middle-class students. This is a better alternative to reducing the amount students can borrow, a policy that by itself would reduce access to quality colleges and universities,” said Charlie Eaton, an assistant professor at the University of California.
How does the growth of student loan debt affect the economy?
“The biggest effect of student debt on the economy is that it increases inequality. This is because students from wealthy families can go to college debt-free. Everyone else must borrow. But student loan debt also limits the ability of more than 40 million Americans to get home loans, auto loans, or other consumer credit. This limits their ability to build household wealth, start businesses, and more. This may limit overall economic growth,” Eaton added.
For the full report, please visit here.