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Student Debt: The Best and Worst States

Aug. 18, 2013
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Over the past 30 years, the cost of obtaining a bachelor’s degree has increased by over 1,000%. Debt varies by type of institution—bachelor’s degree recipients owe a median of:

  • $7,960 at public 4-year institutions
  • $17,040 at private non-profit institutions
  • $31,190 at for-profit institutions

The rise of student debt

The nation’s total student debt has recently surpassed its credit card debt, with student loan debt at an average of $26,600 per student with loans for the Class of 2011. There are many factors that contribute to the increase in tuition costs as well as the growing inability to finance college, including:

  • The economic recession, which led to an increase in college enrollment as well as job instability
  • The decline in state funding for higher education
  • The drop in the stock market, which caused universities to lose money in their invested endowments
  • The rise of for-profit colleges

Debt variance by state

Student debt levels vary on a state-by state basis. This is largely due to the income demographics of the state, the financial aid offered by universities in the state and the availability of state grants and loans.

Some colleges offer comprehensive financial aid packages that reduce the debt level of graduates. Yale University, Pomona College and Williams College and Dalton State College are all low-debt colleges that offer aid to offset the high cost of education.

Best states for student debt

We calculated the best and worst states for student debt using two factors:

  1. Average debt per student: Do students who graduate with debt owe a lot?  Will it affect their future spending and saving patterns?
  2. Percent of graduates with debt: Is student debt widespread in the state?  Do most college graduates have debt?

 1.    Hawaii

Hawaii’s average student debt is the second-lowest in the nation, and the state has the lowest percentage of students graduating with debt. This is largely due to Hawaii’s public universities, which offer low tuition costs. The University of Hawaii system has four campuses, and they accept many low-income students.  Forty percent of students at the University of Hawaii in Hilo in the 2010-11 school year were Pell Grant recipients, showing the university’s commitment to students at all income levels.

2.    Utah

Utah has the lowest average student debt in the nation.  The Utah System of Higher Education offers the Regents’ Scholarship, which awards eligible students $1,000, and awards exemplary students $1,100 per semester for use at any public college or university in the Utah System of Higher Education as well as select private schools.

3.    Nevada

Although 44% of Nevada students graduate with debt, their average debt load is significantly lower than the national average. The University of Nevada, Reno offers plenty of merit- and need-based scholarships to Nevada students, while Nevada State College offers a comprehensive financial literacy program to help students manage their money.

4.    California

California is known for its excellent public and private schools.  The state also has a surprising amount of schools that commit to offering financial aid to all students.  Caltech, Harvey Mudd College, Pomona College, Pitzer College, Scripps College, Thomas Aquinas College and Stanford University all meet the full financial need of all of their admitted students.

5.    Arizona

The state offers generous scholarships to high-achieving students.  Qualifying students can receive a full in-state tuition scholarship from the Arizona Board of Regent’s High Honors Tuition Scholarship. Arizona State University offers generous merit-based scholarships as well.

6.    Louisiana

Eligible Louisiana students can participate in the Taylor Opportunity Program for Students (TOPS) and receive a scholarship if they attend select Louisiana schools.  Institutions also provide education resources. For example, Loyola University New Orleans offers impressive financial literacy resources to ensure that students understand personal finance and loan repayment.

7.    Tennessee

Tennessee has an average student debt of $20,703, which is well below the national average. High school seniors in Tennessee can be eligible for the generous Hope Scholarship, which they can use at a number of eligible two-year and four-year institutions. The state’s premier private university, Vanderbilt, also meets 100 percent of students’ financial need. The university has also promised that financial aid awards do not include loans at all. Instead of need-based loans, Vanderbilt offers additional grants.

8.    Oklahoma

The Oklahoma Legislature has taken innovative steps to help low-income students attend college.  Oklahoma’s Promise provides funding to eligible students whose family income is $50,000 or less.  In addition, Oklahoma University offers its own aid program, the Sooner Promise, to those who qualify for Oklahoma Promise funding.

9.    North Carolina

Davidson College, Duke University and University of North Carolina-Chapel Hill all meet students’ full financial need.  UNC’s Carolina Covenant guarantees that low-income students, once admitted, can graduate debt-free if they work 10-12 hours per week in in a work-study job.  Not only do low-income students at UNC receive financial aid, but the Carolina Covenant includes academic and personal support services as well.

10. Wyoming

The State of Wyoming offers generous need- and merit-based scholarships through the Hathaway Scholarship.  Students can use the scholarship to attend the University of Wyoming or a Wyoming community college.  In addition, the University of Wyoming provides comprehensive financial literacy resources to help students manage their money.

Rank State Average debt Percent with debt Overall student debt score
1 Hawaii $17,447 38% 0.72
2 Utah $17,227 45% 7.78
3 Nevada $19,954 44% 15.63
4 California $18,879 51% 19.87
5 Arizona $19,950 49% 21.17
6 Louisiana $22,455 46% 26.07
7 Tennessee $20,703 53% 28.09
8 Oklahoma $20,897 53% 28.73
9 North Carolina $20,800 54% 29.52
10 Wyoming $23,341 47% 30.09

Worst states for student debt

Rank State Average debt Percent with debt Overall student debt score
1 New Hampshire $32,440 75% 91.11
2 North Dakota $27,425 83% 83.52
3 Minnesota $29,793 71% 77.97
4 Pennsylvania $29,959 70% 77.4
5 Iowa $28,753 72% 75.66
6 Rhode Island $29,097 69% 73.46
7 Ohio $28,683 68% 70.99
8 Connecticut $28,783 64% 66.87
9 Maine $26,046 71% 65.65
10 South Dakota $24,232 76% 65.25

Data was obtained from The Institute for College Access and Success (TICAS) and Peterson’s College Guide.  Data is for 2011 college graduates of public and private non-profit 4-year universities within the designated state.  Financial need data is from US News.  Alaska, Delaware and New Mexico were not included in the study due to data availability.

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