Student Loans: The Best & Worst States

Maine

Maine

MAINE AND RHODE ISLAND TOP WORST STATES

While Schools.com doesn’t make its aggregated data available, it provides some background on what separates some states from others.

Take Maine, for example, which ranks as the worst state for paying back debt. Maine scored the lowest for the following reasons: “The state ranks in the bottom five for average adjusted income and also has the highest debt-to-income ratio nationally, which shows just how hard it can be for residents to balance their salary against what they owe. It also ranked toward the bottom nationally for both the percentage of residents who have student loan debt and the average amount they owe, which are both well above average.”

Newport Bridge in Rhode Island

Newport Bridge in Rhode Island

Rhode Island, which ranked as the second-worst state, shares a high cost of living with Maine. However, finances play a bigger role in this state according to Schools.com. “The state ranks in the bottom five for three major statistics when it comes to paying back college loans: lowest average adjusted income, highest average student debt and ratio of debt-to-income.”

In other words, some factors outweigh others. For example, Iowa – the third-worst state – maintains a relatively low cost of living. However, this is offset by the state’s higher default rate and low debt-to-income ratio. This differs from New Jersey, the fifth worst state, which carries a hefty cost of living, a low average adjusted income, and a very high percentage of graduates holding student debt.

GO WEST, YOUNG MAN, FOR LOWER STUDENT DEBT

Mormon Temple in Salt Lake City

Mormon Temple in Salt Lake City

With its culture of self-reliance and delayed gratification, Utah was probably pre-ordained to rank atop Schools.com’s rankings. The state offers the best of all worlds for college graduates. “Utah has one of the highest average incomes nationally, low unemployment rates, and the cost-of-living is below the national average. Only half of the population carries any student debt, and Utah ranks in the top five nationally for student debt-to-income ratio. The student loan default rates are low in Utah as well — significantly below the national average, showing that residents of Utah are savvy when it comes to managing their money.”

Despite a larger population, Washington scored the #3 ranking (behind Wyoming), with graduates buoyed by the state’s economic growth according to Schools.com. “Washington residents enjoy no state income tax and have the highest adjusted annual income in the country. Although more than half of the population carries student loan debt, the state still ranks in the top three nationally for student debt-to-income ratio In turn, the student loan debt default rate is below the national average, signifying Washington residents are able to stay ahead on their repayment plans.”

Virginia Capitol Building

Virginia Capitol Building

Despite its struggling construction and gaming industries, Nevada boasts the lowest number of graduates who owe money, helping them reach the #4 ranking. In fact, Virginia is the only state east of the Mississippi to rank in the top 10. Here, borrowers profit from a high annual adjusted income coupled with a an enviable debt-to-income ratio.

With economic growth spotty in many regions, LaFrance urges graduates to evaluate their options.  “Students may need to consider relocating or broadening their job search to other areas for better employment opportunities that allow them to pay down their loans as quickly as possible.”

To see how your state ranks, go to the next page.

To read profiles of the 10 best states for loan repayment, click here. For profiles of the 10 worst states, click here. To see how your state fares for student debt, click here.

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