Top 5 Best and Worst States for Student Debt

Statistics show that a higher education often leads to higher salaries and more job opportunities. However, recent reports surrounding student loans in the U.S. have also shown that a college education doesn’t automatically lead to financial stability.

The current state on student loans in the U.S. is grim*:

  • The overall outstanding student loan balance is $1.279 trillion, second only behind mortgage debt
  • It’s one of the fastest growing types of debt, increasing by $20 billion in the second quarter of 2016 alone
  • 11% of all student loans are at least 90 days delinquent or default in payment
  • In 2016, the average graduate had $37,172 in student debt, averaging a monthly loan payment of $351

Those working to pay off student loans know just how crippling the massive debt can be. It stops people from purchasing homes and cars, and in some cases causes them to fall behind on important expenses such as medical care.

What’s interesting is that location by U.S. state has a huge impact on not only how much debt students take on, but also on how easily and quickly they’re able to pay it off.  A study put together by Wallethub shows which states are the best, and worst, environments for students working to pay off student loans.

Source: WalletHub


The study takes into account several factors related to the level of student debt as well as the opportunities for student funding, such as grants and student job opportunities, within each state. Those factors include:  

  • Average student debt amount
  • Number of students with debt in proportion to the overall state population
  • Percentage of debt in proportion of income
  • Percentage of student loans that are past due or in default
  • Percentage of student loan borrowers who are over the age of 50
  • Unemployment rate for people aged 25-34
  • Availability of student jobs, paid internships, and student grants

That’s not to say that all states listed in the top 5 best states scored highly in every one of these factors; however in a weighted total, these states came out on top.

Top 5 Best States for Student Debt

  • Utah
  • Wyoming
  • North Dakota
  • Nevada
  • Virginia

The top 5 best states for student debt offer an advantageous setting for those working to pay back loans. Overall, their individual state populations have a lower proportion of people that currently have student loans. Those who do have student debt have a lower than average amount and fewer people are behind on payments for those loans.

Additionally, these states offer more resources in general that help students to minimize the amount they borrow, such as grants. They also offer more opportunities such as student jobs and paid internships to help students pay off loans more quickly. For instance, Wyoming received an A grade on state support for higher education, while North Dakota received a B grade.

Finally, these states are experiencing lower unemployment rates overall. For instance, North Dakota has the fifth smallest unemployment rate in the country at 3%, while Utah has the eighth smallest at 3.1%.

Top 5 Worst States for Student Debt

  • Pennsylvania
  • Maine
  • Oregon
  • West Virginia
  • District of Columbia

The top 5 worst states for student debt have less than ideal settings for those looking to quickly pay off student debt. These states have a higher percentage of residents with student debt in proportion to their overall population. Particularly alarming is that these states have a higher number of people over the age of 50 still working to pay off student debt.

These states have a higher than average student debt amount per person and a high instance of number of late or defaulted payments.

Several of these states currently offer fewer resources, such as grants, that can help minimize loan size. New Hampshire, Pennsylvania, and Oregon all received an F grade in terms of state support for higher education, while Maine earned a D grade.

Finally, several of these states have seen better days when it comes to unemployment. West Virginia has the fifth largest unemployment rate in the country at 5.9%. Pennsylvania is eighth at 5.6%.

The Big Picture

None of the 50 states plus the District of Columbia received a score in the upper 80’s or higher.

Here is the full list ranking states by debt:


Overall Rank

State Total Score
1 Utah 84.18
2 Wyoming 79.33
3 North Dakota 70.14
4 Nevada 69.54
5 Virginia 68.62
6 Washington 67.47
7 Alaska 65.78
8 Colorado 64.4
9 Hawaii 63.94
10 New Mexico 63.11
11 Arizona 63.11
12 Nebraska 63
13 Louisiana 62.79
14 Texas 62.53
15 Oklahoma 61.24
16 California 60.23
17 Kentucky 59.95
18 Maryland 59.63
19 Delaware 58.77
20 Wisconsin 57.76
21 Tennessee 57.65
22 New Jersey 57.35
23 Kansas 57.14
24 Illinois 57.07
25 Idaho 56.71
26 Massachusetts 56.11
27 Missouri 56.04
28 North Carolina 56.02
29 Arkansas 55.91
30 Connecticut 55.07
31 Florida 54.89
32 Indiana 54.36
33 Montana 53.41
34 Minnesota 53.11
35 South Dakota 52.94
36 New York 52.44
37 Rhode Island 52.06
38 Iowa 51.94
39 Michigan 51.35
40 Alabama 51.03
41 Georgia 50.68
42 Ohio 49.21
43 Mississippi 48.76
44 New Hampshire 47.61
45 South Carolina 47.14
46 Vermont 46.43
47 Pennsylvania 46.03
48 Maine 44.1
49 Oregon 42.95
50 West Virginia 39.37
51 District of Columbia 36.73


Tips for Avoiding Student Debt

Very few are lucky enough to be able to avoid student debt all together. For most, it’s a necessary evil for gaining a higher degree.

But there are several ways students can minimize the risks and pitfalls associated with high loans:

  • Borrow only the minimum amount you’ll need to cover basic education expenses
  • Take the time to explore your options and compare the benefits and costs associated with different schools
  • Don’t use your student loans for anything other than school related expenses
  • Take a financial coaching class to become financially literate
  • Take the time to look for scholarship opportunities
  • Work a part time job while in school- but be careful to not sacrifice your grades
  • Make sure you understand all details about your loan before taking it out, including the interest rate and repayment options

*Statistics taken from Federal Reserve Bank of New York and Student Loan Hero

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