Average Student Loan Debt StatisticsReviewCompareAdviceFAQ'sCalculator

Average Student Loan Debt Statistics

Student loan debt is a big problem in the U.S. This study looks at data in a number of different statistics to determine the best states for student debt.

Student Loan Debt Statistics

College and university students all over the country have racked up an unprecedented amount of student debt in pursuit of their degrees. According to the Economist, current U.S. student loan debt exceeds $1.2 trillion, a staggering increase of over 300% for the past decade. The extreme level of student debt that's taken on in the wake of the 2008 economic crisis affects spending power and threatens to curb economic growth.

Seven out of 10 graduating seniors at public and non-profit colleges had student loans in 2014, with an average debt of $28,950. This represents an increase of 2% over the Class of 2013. For the past decade, student debt levels rose twice as fast as inflation, according to The Institute for College Access & Success (TICAS). The organization compiles figures from their annual survey of 1000 plus colleges, as well as a government survey of former students that is compiled every four years.

Student debt weighs down individuals and families, who postpone dreams of home ownership, starting a business or having children. Others might shy away from higher education altogether, deterred by high tuitions and the fear of taking on a crushing debt load.

Average Student Loan Debt - Key Findings

This article looks at the increase in student debt, as well as the increases in the cost of higher education. It also presents information on the best and worst states for student debt. The piece closes with strategies and advice for managing student debt.

  • Student debt is at an all-time high and continues to grow faster than inflation
  • There are differences in the level of student debt by region and state
  • States with the lowest student debt also have the lowest percentage of students carrying debt.
  • States with the highest student debt tend to be in the northeast and midwest.
  • Strategies for managing student debt include both private and federal consolidation loans.

Student Debt Crisis Continues to Grow

The nature of student debt changed in the decade from 2004 to 2014, according to TICAS. The average student loan debt for a bachelor's degree increased at more than double the rate of inflation in this period. It grew notably faster in some states.

"Borrowers are graduating with a lot more debt than they did 10 years ago, and the Class of 2014's average debt is the highest yet," said Lauren Asher, TICAS president. "Student debt has rightly become a major policy issue. Students and families need better information and better policies to make college more affordable and debt less burdensome."

These graphs show the ten-year change for the best and worst states for student debt from 2004 to 2014. Note that the percentage of debt change is also recorded and that the rate of increase in student debt was much faster in the worst states for student debt.

Top 10 States with highest student debt: 2004 vs 2014

As you can see below, states with lower average debts tended to rise consistently with the economy. Only a few (like Hawaii and Wyoming), had more dramatic increases.

Top 10 States with Lowest Student Debt: 2004 vs 2014

Though it's important to consider the states with the highest amounts of student debt, it's also important to note that some states are increasing faster than others. In the chart bellow you can see that, again, Delaware makes the top of the list by a wide margin. However, Maryland is next with a 129% increase, though it is not on the list of states with the highest average debt. Even Hawaii, which made the list of states with the lowest debt, has seen an 82% increase since 2004.

Top 10 States with the Highest Increase in Student Loan Debt: 2004 vs 2014

College Costs vs. Value

Despite the student debt crisis, Americans still have faith that a college degree is the path to earning more and getting ahead. The evidence does back this up. The Economist cites The New York Federal Reserve calculates a bachelor's degree gives a 15% return on investment.

But is college really worth the cost? Again the Economist weighs in with this blunt assessment, that many degrees are a waste of money, and that the return on investment would be improved if college were cheaper.

One driver of student debt is the skyrocketing costs of attending college. The average cost of a non-profit private four-year college for 2014-15 was $42,419, up from $30,664 from 2000-2001. Public four-year college costs expanded over the same period from $11,635 to $18,943, according to CNBC.

A number of factors have pushed up the cost of higher education. The economic collapse of 2008 and subsequent recession led to an increase in college enrollment and simultaneous job instability. State funding for higher education decreased during the recession. The stock market fell, causing colleges and universities to lose money on their endowments.

National Student Loan Debt - Regional Differences

The level of student debt varies widely by region. Students in the East and Midwest are borrowing amounts well above those in then West and South. There are a variety of factors are at play in driving the difference in student debt by state.

These differences are due to the cost of living and income demographics of each state, the financial aid packages available from the schools, and the access to state loans and grants. Additionally, some states have a larger tax base to draw on for funds for higher education, along with a tradition of allocating funds for education.

Average Student Debt by State: 2014

The level of student debt also varies according to which college you attend. In 2014, student borrowing by college averaged as low as $4,750 on up to a high of $60,750. The percentage of students borrowing by college ran the gamut from two percent to 100%.

High Student Loan Debt States

State averages for student debt at graduation in 2014 ranged from $18,900 to $33,800. The percentage of students carrying debt varied by state from 46% to 76%.

Graduates of the class of 2014 in Delaware had the dubious honor of carrying the highest student debt load, averaging $33,808. New Hampshire, Pennsylvania, Rhode Island and Minnesota round out the five worst states for student debt, with an average indebtedness of over $31,000. These states tend to have a higher percentage of students carrying debt, for example, New Hampshire had a whopping 76% of students shouldering debt upon graduation.

Top 10 States with Highest Percent of Students with Debt: 2014

Low Student Loan Debt States

The best states for low student debt are led by Utah with an average of $18,921 for the class of 2014, with a relatively low 54% carrying some student debt. It appears that there is a little overlap with averages and the amount of students with debt. While states like States Utah, have lower percentages of students in debt, higher debt averages tend to have higher amounts of students with debt. The other states in the top five are New Mexico, Nevada, California and Arizona, with an average of $20,418 owed. These best states for student debt have an average of 52% of graduates saddled with student debt.

Top 10 States with Lowest Percent of Students with Debt: 2014

Help with Student Loan Debt

If you have substantial student debt, first and foremost you want to retire the debt as soon as you can. But it's also important that you are able to afford the payments. Be sure you know the details of each loan when payments are due, and how much.

Do you have federal loans, private loans, or both? Some federal loan programs qualify for federal consolidation loan programs. If you are eligible, you can reduce your monthly payment. You'll pay more in interest if you take longer to repay, but it may help you to breathe easier each month.

Check the federal Direct Consolidation Loan webpage to see if your federal loans qualify for the program. Direct federal subsidized or unsubsidized loans, as well as Federal Family Education Loan Program (FFELP) loans can be consolidated with the program.

With a direct federal loan, you also have the option to switch to a fixed interest rate in place of a variable rate, helping you budget for your payments. The Direct Consolidation Loan program limits fees, and often can lower monthly payments. Again, you pay more interest over the life of the loan with a longer repayment term.

Private student loans can also be rolled into one consolidation loan, but with a private lender, as these loans do not qualify for federal student loan consolidation programs. Some private lenders will make loans that consolidate both federal and private student loans. If you combine private and federal loans, you will lose any benefits associated with your former federal loan, lose typical student loan protections such as forbearance or deferment.

You'll need a good credit score and proof of steady income just as in borrowing for an auto or mortgage. You may qualify for average credit but you'll pay a higher interest rate. Those with lower credit scores might consider bringing a cosigner with a good rating to help you get a lower interest rate.

Take your time shopping for a consolidation loan, looking at lenders and checking what interest rate you qualify for. With the growth of online lending, you can get interest rate quotes from several lenders without affecting your credit score, as most use a soft credit check to quote rates. Calculate whether you'll save money over the life of a given loan based on interest rates and the term of the loan. Look at all fees associated with any loan, especially loan origination fees.

How to Get Out of Student Loan Debt

You can get a quote on a consolidation loan for your student debt without any cost or commitment. The goal is to see if you can find a loan that can save you money with a lower interest rate. It can also simplify your life to have only one monthly payment for student debt.

While many online lenders are fair and transparent in their business practices, be aware that there are predatory lenders out there. Your best protection is to scrutinize any loan offer carefully before accepting it and check consumer reviews of any lender before signing on with them. It takes time to read through loan papers and check the details, but in the long run it's well worth the effort and can save you money.

Find Out What Type of Loans You Have

  • Do you have federal student loans, private student loans, or a combination of both? The U.S. Department of Education provides education funding via the Federal Direct Loan Program with several categories of direct loans, and the Federal Perkins Loan Program, where loans are generated through the individual school.
  • Private student loans tend to be more expensive than federal student loans. Students often require a co-signer for these loans and the interest may not be tax deductible. With private loans, pay close attention to the details of the loan agreement.
  • With federal student loan programs, you may qualify for perks allowing you to reduce or temporarily stop payments under certain conditions. Some federal loans offer advantages to teachers and those working in public service. Check the terms of your specific federal student loan to see if you qualify for any of these advantageous perks. If you have concerns about private student loans, you can contact the Consumer Financial Protection Bureau with your questions.
  • When does your repayment period start? Some private student loans require payments while you are still in school. With federal student loans, there is often a grace period after graduation before you must begin repayment. Not all federal loans have a grace period.
  • Do you have protection against job loss? If you are unable to pay your federal student loan, you may qualify for forbearance or deferment, where you pay less or pause your payment temporarily. Interest continues to accrue. A few private lenders offer unemployment protection such as SoFi, but this is unusual for private lenders.

Know Your Loan Terms

  • Can you change your terms without penalties? Those who combine federal student loans into a Direct Consolidation Loan from the federal government can choose from multiple repayment plans, and may switch repayment plans if they want to without penalty. If you consolidate federal loans with a private lender, you lose the perks and advantages associated with the federal loan under a new private consolidation loan.
  • Review your loan documents so you are familiar with your interest rate, late fees, payment terms, whether you can prepay without a penalty, and how much longer your repayment term is. Put yourself in the driver's seat so there are no surprises.
  • In pursuit of paying off student debt, it's important to track your finances. Create a monthly budget listing all your income and expenses. How much can you budget for your student loan payment? Look for expenses you can cut. Can you drop your cable subscription and add the money saved to your student loan payment? Get creative to save on food, clothing, transportation and more. Embracing frugal alternatives puts money in your pocket.

Create a Lean Budget Focused on Repayment

  • In pursuit of paying off student debt, it's important to track your finances. Create a monthly budget listing all your income and expenses. How much can you budget for your student loan payment? Look for expenses you can cut. Can you drop your cable subscription and add the money saved to your student loan payment? Get creative to save on food, clothing, transportation and more. Embracing frugal alternatives puts money in your pocket.
  • New to budgeting? Consider using budgeting software to give you a leg up on the process.

Student Loan Consolidation

With student loan consolidation, you combine student loans into one new loan, with new terms. By taking a new loan, you change your loan terms to an entirely new set of interest rates and fees. Look for the features most important to you, such as no prepayment penalty, and consider whether it's more important to lower your interest rate, or reduce your monthly payment. You can also compare consolidation loans rates side by side here.

Get a quote on a consolidation loan for your student debt without any cost or commitment. The goal is to see if you can find a loan that can save you money with a lower interest rate. It can also simplify your life to have only one monthly payment for student debt. While many online lenders are fair and transparent in their business practices, be aware that there are predatory lenders out there. Your best protection is to scrutinize any loan offer carefully before accepting it and check consumer reviews of any lender before signing on with them. It takes time to read through loan papers and check the details, but in the long run it's well worth the effort and can save you money.

Sources:

Last Updated:

Join the discussion

Replying to Cancel

Your comment has been submitted and is awaiting approval from one of our administrators. Thank you for your readership!

Loading

Submitting your comment...

16 Great Money Saving Tips!

Cut expenses by $500+ a month. Download our FREE eBook today.

Download Now

Join our newsletter to receive the latest money saving advice, reviews, and offers!

YesI want to learn how to be a smart consumer!NoI'm not concerned about wasting money

100% privacy. We will never spam you.

Where should we mail you our
money saving advice, reviews & offers?

100% privacy. We will never spam you.

Adding your email to our mailing list.

Please wait just a moment

Your email has been added!

Thank you for signing up.

Close

Looking for the best student loan consolidation?

We've researched and reviewed the top companies.

See Our Top 3

Advertiser Disclosure

In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.