With student loan debt surpassing $1.6 trillion nationally, the personal-finance website WalletHub released its report on the States with the Most and Least Student Debt in 2024, as well as expert commentary, to see where borrowers are in the most financial trouble.
WalletHub compared the 50 states and the District of Columbia across 12 key metrics. The data set ranges from the average student loan balance to the unemployment rate among 25- to 34-year-olds to the share of students with past-due loan balances.
Student Debt in California (1=Most; 25=Avg.)
Overall Rank: 48th
49th – Average Student Debt
46th – Proportion of Students with Debt
51st – Student Debt as Percentage of Income (Adjusted for Cost of Living)
33rd – Percentage of Student Loans Past Due or in Default
25th – Availability of Paid Internships
37th – Grant Growth
“College keeps getting progressively more expensive, and so does borrowing money to attend. Federal student loan interest rates are rising to a 12-year high for the upcoming academic year, so it’s important to plan carefully when borrowing. In addition to attending college in a less expensive state and pursuing other avenues of funding like financial aid and grants, students should also carefully calculate how much they can afford to borrow before taking out a loan,” said WalletHub Analyst Cassandra Happe. “Mississippi has the biggest student debt problem in the country. The average amount owed by people with student loan debt equals about 58 percent of the median income in the state, the highest rate in the U.S. In addition, Mississippi has the third-highest default rate on student debt. One reason why student borrowers are struggling in Mississippi is that they are having a hard time finding jobs – the state has the second-worst availability of jobs to students, and the fourth-lowest share of paid internships.”
Mississippi has the most student loan debt, followed by Pennsylvania, Delaware, West Virginia and South Carolina rounding out the top five. States at the opposite end of the spectrum, those with the least student loan debt, are New Mexico, California, Washington, Hawaii and Utah.
For the full report, visit:
https://wallethub.com/edu/best-and-worst-states-for-student-debt/7520
Expert Commentary
What tips can you offer students looking to minimize the amount of debt they take out for higher education?
“Withdraw wisely! If you do not have to take the maximum amount, do not! Regardless of what amount you withdraw, use it for educational expenses – tuition, fees, books, living necessities. Do not use your student loans for personal items like clothing, trips/vacations, or off-campus housing that is too expensive. If you choose to live off-campus, get a roommate (or two) in an affordable apartment/house. You do not need state-of-the-art appliances, granite countertops, or pendant lighting. Go for federal loans first – they offer reasonable interest rates that can also help you build credit. Be cautious of private loans – these are often at a higher interest rate than federal loans and are less likely to be considered in any federal loan forgiveness program.”
Meg Hancock, Ph.D. – Associate Professor, University of Louisville
“The single most important thing a student can do to limit debt is limit their lifestyle. A wise woman I know urges students at orientation to live like a student while they are a student so that they may live like a professional when they achieve that status. That means having a roommate, not living in the apartment complex with a party room and a pool, and not buying a car – use public transportation if it is offered in your community. Do not borrow to support a lifestyle; borrow only what you need to have a bed to sleep in and to put food on the table. Understand what is a ‘want’ versus what is a ‘need.”
Julie Poorman, MPA – Director of Financial Aid, East Carolina University
Should the government reduce the amount of money students can borrow? How about basing the total amount a student can borrow on the quality of the university and employability of the degree/field?
“Rather than reduce the amount of money students can borrow, federal and state governments would do well to better fund educational institutions, particularly state universities, historically Black colleges and universities, and tribal colleges. Increasing funding can make education more accessible, which will benefit all people and communities.”
Meg Hancock, Ph.D. – Associate Professor, University of Louisville
How should students and their parents think about the return on investment in spending on higher education?
“Truly, look at public schools and compare the ‘out of pocket’ costs on each aid offer a student receives. Some private schools can bring their costs down to at or below that of a public school where the student would be paying out-of-state tuition. What I would really like to see parents do is have a serious conversation with their children about what they can afford to cover, what they will have to take on debt to provide and be very honest with their children about the experience of making monthly payments. So many young people do not even know how much their family pays for their cell phone bill, let alone the experience of making a car payment or paying off the credit card the student used to purchase that coat, those shoes, or that Xbox. Students should have the experience of working, managing money, and balancing wants against needs before they begin to borrow student loans.”
Julie Poorman, MPA – Director of Financial Aid, East Carolina University
