The states with the worst student debt (and debtors)

Student loan debt in the U.S. Has surpassed $1. 4 trillion and counting, with about 43 million americans having at least one outstanding loan. On average, borrowers owe more than 28.000 dollars, with this amount more than doubling among graduates.

A comprehensive new study by lendedu reveals which states have borrowers with the highest student loan burdens. The report offers some interesting insights into how a particular state’s political affiliation can affect student debt. In particular, there may be clues about how lawmakers can address the student loan problem under the new administration. (see: 10 tips for managing your student loans. )

The worst states for student loan debt

In terms of states that had the highest debt loads, 11 states had an average balance of more than $30.000 per borrower, with connecticut leading the way .. They are listed below, from highest average balance to lowest:

10. South carolina – $30, 324

Eight of these eleven states are “blue,” represented by democratic senators. One (pennsylvania) splits the difference, with a republican and a democrat serving in the senate. This reflects a larger trend in the study. When student balances were compared based on the party of state senators, borrowers in blue states shouldered a larger share of the debt burden with an average debt of 28.451 dollars vs. 22.$719 for republican-led “red” states. .. Click on the map below to see the status information (scroll over the map to make it larger or smaller).

Also notable: despite higher average balances, borrowers who lived in democratic states were less likely to default on their loans. According to lendedu data, the default rate for states with democratic senators was 4.76%, compared to 7.40% in states where republicans were in control. Effectively, borrowers in red states are stuck with a rate on their loans that is 1. Is 55 times higher than that in blue states. However, the state with the highest percentage of defaults is blue: new mexico, with a 17.92% default rate. The next seven states (alaska, west virginia, mississippi, kentucky, montana, oklahoma and arkansas) are red. (read: the worst things that can happen if you don’t pay your student loans. )

Lendedu also introduced the numbers for individual congressional districts (click here and scroll down to see the congressional map) ..Data show that borrowers who lived in districts with democratic representatives had an average of $28, 501 in student loans, while those in republican districts had an average of $25, 562 in loans. Default rates again veered in the same direction, with 6.84% of those represented by a republican and 5.42% of those represented by a defaulting democrat. (read: 10 ways student debt can destroy your life. )

What the gap is?

Why there’s a discrepancy between the number of students borrowing in democratic states compared to republicans – and how often they default? A number of variables may be at work, starting with tuition rates.

Take utah, where the average student debt balance is $18, 722 and both senators belong to the republican party. According to the college board, the average annual in-state tuition for the 2016/17 academic year was approximately $6,500. Look now at connecticut, a blue state where students have the highest average loan debt. There, domestic citizens pay more than 12 on average.000 dollars for a single academic year. It is understandable that in states where the cost of attendance is higher, students are likely to borrow more.

It is also possible that republican states will have fewer programs aimed at helping students pay for college. An alternative explanation suggested by lendedu is that students in red states are more likely to be able to attend less expensive alternative schools, such as trade and technical schools, which reduces the need to borrow heavily for a degree.

On the default side, higher default rates in republican states could be due to lower median incomes or lower employment opportunities in those states, especially if that state has a high cost of living. As lendedu points out, the problem may lie with republican lawmakers’ approach to addressing the problem of student loan debt. If lawmakers do not support initiatives that benefit student borrowers, the likelihood of default may increase.

What congress needs to consider

Since the election, president trump has wasted no time in proposing changes to student loan policy. One measure, for example, would require borrowers on income-driven repayment plans to pay more of their income toward their loans, but allow them to ask forgiveness for their outstanding balance sooner.

With congress controlled by republicans, thinking around the best ways to tackle the challenge of student loan debt is in flux. Right now, there seem to be two big goals on the agenda: increase the role of private lenders in the student loan industry and simplify the federal financial aid system. This could include eliminating the parent and graduate PLUS loan programs, which are unabbreviated federal loan programs.

This type of thinking has its advantages and disadvantages. More private lenders entering the market means more variety for students, but in an environment of rising interest rates, this could make borrowing more expensive than it already is.An end to the PLUS loan program means graduates would not be able to pay off a virtually unlimited amount of debt, but it could hinder their ability to cover college costs. This, in turn, could lead to fewer students earning degrees, resulting in a smaller pool of educated individuals in the workforce. In this scenario, the economy as a whole could suffer. It could especially hurt middle class students – those who are too rich to get significant scholarship funding but are unable to pay without outside funding that now comes from loans.

The bottom line

Finding a solution to the student loan dilemma means looking at broader issues, such as overall college affordability, the availability of loan alternatives, and putting policies in place to lower default rates. Republicans and democrats need to think seriously about how changes to federal student aid or expanding the scope of private loans will affect the next generation of college graduates. Once they recognize how their states differ, they can focus on developing a set of solutions that fit the differences this study has uncovered.