Source: Thinkstock
The path to higher education is increasingly being paved in debt. With lenders passing out student loans like candy, leading to tuition price hikes that regularly exceed wage gains or savings rates, debt is becoming the popular funding choice for a college degree. Using debt can be beneficial if done properly, but borrowers are falling behind in certain states.
Student loans are more popular than any other form of household debt, with the exception of mortgages. Since 2008, student debt has surged by 84% to almost $1.2 trillion, according to recent reports from Experian and the Federal Reserve. In fact, approximately 40 million consumers have at least one open student loan, with the average balance totaling $29,000 per consumer. Nearly 11% of aggregate student loan debt is at least 90 days delinquent or in default, and this rate may be significantly underestimated due to various types of grace periods.
In order to highlight the importance of location for borrowers, WalletHub recently analyzed the 50 states and the District of Columbia across seven key metrics, listed below.
- Average student debt: half weight
- Proportion of students with debt: half weight
- Student debt as a percentage of income (measures overall state-level student debt per borrower divided by median salary adjusted for cost of living): double weight
- Unemployment rate for people ages 25 to 34: full weight
- Percentage of student loans in past-due or default status: half weight
- Percentage of student loan borrowers in past-due or default status: half weight
- Percentage of student loan borrowers 50 and older (adjusted by the population of people 50 and older): full weight
Let’s take a look at the 10 worst states suffering from student debt.
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10. Alabama
- Overall rank: 42
- Weak spot: Youth unemployment
Source: Thinkstock
9. New York
- Overall rank: 43
- Weak spot: High student debt as percentage of income
Source: Thinkstock
8. Mississippi
- Overall rank: 44
- Weak spot: Students/borrowers past due or in default status
Source: Thinkstock
7. Connecticut
- Overall rank: 45
- Weak spot: Average student debt
Source: Thinkstock
6. Ohio
- Overall rank: 46
- Weak spot: Average student debt
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5. Oregon
- Overall rank: 47
- Weak spot: High student debt as percentage of income
Grant Halverson/Getty Images
4. South Carolina
- Overall rank: 48
- Weak spot: Average student debt, broad weakness across other variables
Streeter Lecka/Getty Images
3. Georgia
- Overall rank: 49
- Weak spot: Youth unemployment
Source: Thinkstock
2. Maine
- Overall rank: 50
- Weak spot: Average student debt
Source: Thinkstock
1. Rhode Island
- Overall rank: 51
- Weak spots: Average student debt, youth unemployment, student debt as percentage of income
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