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2017’s States with the Most and Least Student Debt

2:40 AM

Posted by: Richie Bernardo

Location, location, location are the three most important words in real estate. But the mantra applies to education, too. Indeed, where you live doesn’t just affect the value of your property; it also reflects the worth of your college degree — the same degree that may have put you in debt. With 11 percent of all student-loan debts in delinquency or default as of Q1 2017, graduates need to be selective with the places in which they choose to put their degrees to work. New York City, for instance, might boast a high average salary for a certain profession, but the high cost of living can outweigh the gains, leaving little to pay off college debt.

Save for mortgages, student loans make up the largest component of household debt for Americans. And our collective debt keeps growing. At the end of the first quarter of 2017, total outstanding college-loan balances disclosed on credit reports stood at $1.34 trillion, according to the Federal Reserve Bank of New York. The latest figure represents an increase of $34 billion since the end of 2016.

Despite the evidence that income potential rises and chances of joblessness decline with more schooling, many graduates entering the labor market are learning the hard way that a college degree can’t guarantee financial security. Post-college success depends on numerous factors, including where a graduate lays down roots. Student-loan borrowers generally fare better in strong-economy states with low college-debt-to-income ratios.

With student-loan debtors in mind, WalletHub’s analysts compared the 50 states and the District of Columbia based on 10 key measures of indebtedness and earning opportunities. Our data set ranges from average student debt to unemployment rate among the population aged 25 to 34 to share of students with past-due loan balances. Read on for our findings, expert insight from a panel of researchers and a full description of our methodology.

Tip: If you’re considering borrowing money for college or are in danger of defaulting, we advise leveraging a Student Loan Calculator to determine an affordable monthly payment and payoff timeline.

  1. Main Findings
  2. Ask the Experts
  3. Methodology

Main Findings Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/7520/student-debt-geochart.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2hndat1;

 

Overall Rank

State

Total Score

‘Student-Loan Indebtedness’ Rank

‘Grant & Work Opportunities for Students’ Rank

50 West Virginia 39.37 49 50
51 District of Columbia 36.73 51 6

 

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/7520/student-debt-bubblechart.html" width="700" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:700px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2hndat1;  

Artwork Best and Worst States for Student Debt report 2016 V4

Ask the Experts

Incurring more student debt than one can handle can produce significant repercussions in the future. To advance the discussion, we asked a panel of experts to share their advice and insight with current and potential student-loan borrowers. Click on the experts’ profiles to read their bios and responses to the following key questions:

  1. What tips can you offer students looking to minimize the amount of debt they take out for higher education?
  2. 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?
  3. How do we slow the growth of higher-education expenses?
  4. How will the policy proposals of the Trump Administration impact student borrowing and higher-education finance more generally?
  5. How does the growth of student-loan debt affect the economy?
  6. How should students and their parents think about the return on investment to spending on higher education?
< > Tracy Boulukos Assistant Provost for Enrollment Management and Director of Student Financial Aid in the Division of Academic Affairs at Florida Atlantic University Tracy Boulukos What tips can you offer students looking to minimize the amount of debt they take out for higher education? Take advantage of dual enrollment in high school if tuition is free. It’s an economical way to earn credits before you are admitted to college. Earn your AA Degree at a community college, and then transfer to a university for your Bachelor’s Degree, this will minimize student loan debt. How should students and their parents think about the return on investment to spending on higher education? It’s all about planning. There is plenty of information supporting the increased earnings over one’s lifetime with a college degree. The sooner families start planning, the better off they will be. Prepaid tuition plans, 529 College Savings Plans, scholarships, and affordable institutions with a track record of holding down costs are smart options. Ron Day Director of Student Financial Aid at Kennesaw State University Ron Day What tips can you offer students looking to minimize the amount of debt they take out for higher education? Students and parents need to seek assistance in basic financial literacy information. One important item is the construction of a budget. Budgeting for educational cost is important. Unfortunately, many individuals simply borrow (and borrow the maximum allowed) without understanding what is actually needed compared to costs. This often results in over-borrowing, receipt of refunds based on credit from over-borrowing, and ultimately, there are issues during the repayment phase because of very large student loan debt. Financial Aid Offices are instructed by the U.S. Department of Education to offer student loans to students based on federal regulations. We must tell students the maximum amount they are eligible to receive. Many think that because it is offered, they indeed should accept the total amount. That is not the case. A better understanding well in advance of the senior year in high school of what “educational costs” actually means is vitally important. Financial aid has limits, and often individuals approach educational cost thinking “financial aid will cover all costs.” That is not the intent of financial aid -- it is to supplement what the parent and student can and cannot contribute to educational costs. Parents and students beginning very early on the planning phase of educational cost is vital. This should begin at a very early age. Many, many individuals come to college with no plans in place, only to discover the high cost associated with attending, the fact that education costs will most likely continue to increase, and that financial aid cannot cover the vast amount of cost elements of attending. 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? One thing that should be accomplished during the Reauthorization of the HEA is that colleges should be allowed to reduce loan limits on categories of students, which could result in reducing and controlling borrowing:
  • Specific populations that are more prone to defaulting.
  • Certain academic programs that may not enable students to find adequate employment following graduation. Although all programs should indeed be based on a “gainful employment” mentality, many students have difficulties with car payments, rent, basic living needs -- and student loan payments -- because the job market is not as financially lucrative as the student anticipated.
  • Allowing the reduction based on academic progression. If a student remains a freshman for several years and continues to borrow because of remaining a freshman, the aggregate totals could be depleted very quickly (especially when approaching their senior year in college).
  • Allow the reduction of student borrowing based on enrollment status. If a student is enrolled as a half-time student, they should only receive half of the loan available, not the full amount. The same should be true of students enrolled three-quarter-time.
The elimination of differences in annual loan limits based on year in schools should be reviewed during Reauthorization. It makes no sense that a freshman, who pays the same as a senior, has a lesser amount of eligibility simply because she or he is a freshman. Schools should be allowed to provide more robust counseling to students, in an effort to assist with borrowing. Currently we are confined to certain allowances, as dictated by the U.S. Department of Education. How do we slow the growth of higher education expenses? The question seems to imply that we should curb the growth of educational costs. I do not adhere to the articles published recently, stating that we cannot say the cuts in public funding is one of the main reason for this increase -- it is in fact one of the reasons. Many reasons exist for this increase:
  • Schools must have students -- thus the cost of competing for these students has increased. This causes the need for building and maintaining newer and more refined facilities that can meet the needs of many programs, i.e., Information Technology, Architecture, Digital Animation, Information Security and Assurance, Computer Game Design, and many of the Engineering programs. These programs are highly specialized and require the latest facilities and amenities.
  • Because schools must develop and ensure access, and success is foremost in their mission, attracting the best and brightest is indeed one of the more important aspects of diversity. This pool is small, and often requires resources to successfully matriculate these students. All schools wish to attract and enroll the high-achieving student -- yet, these students are recruited by many schools, thus it can become a challenge among schools to see who can provide resources needed to ensure enrollment.
  • Student services have increased out of necessity.
  • Because of the need for the latest and most up to date computer needs, schools must continually seek to improve and provide access to most modern technology around. Classrooms must be continually updated, because of the needs related to online programs computers must be the latest and most modern available, residence halls and other locations around all campuses must have the best and most stout internet connections, etc. It is a challenge to keep ahead of the latest versions of systems, hardware and software.
  • Students are much more demanding regarding residence halls. The typical “cinder-block-walled dorm rooms” are ancient history -- not to mention community baths. Residence halls are much like high-cost apartment living on many campuses. These require updates and continual maintenance.
The rising cost associated with college sports is one of the concerns related to increases in educational cost. Facilities require updating and expansion often. I strongly believe that sports on a campus is necessary for many reasons:
  • Leadership development;
  • Pride and spirit;
  • Instilling the need for fitness;
  • Assists with recruitment;
  • Enables a more well-rounded atmosphere;
  • Draws in the surrounding community to the college;
  • Increasing alumni base -- thus returning revenue is increased.
How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? As an Aid Administrator for 34 years, I have constantly sought to demonstrate a genuine and deep desire to ensure low-income students have access to an education. Many of these students need federal grants to assist with the cost of an education. The Pell Grant program is vital to providing access to our low-income population. To deplete the reserve fund may not cause immediate issues with the program -- but it will definitely cause long-range issues. I have concerns related to proposals associated with loan servicers. Students need assistance in the repayment phase of student loans, and must have access to repayment options. I strongly believe students should not have to opt into certain programs based on income -- it should be something offered without the student having to demonstrate any initiative. If these programs are collapsed or eliminated, it is a certainty that student loan defaults will increase substantially. The Department of Education are partners in the entire financial aid process. They are vital in the delivery of financial aid. We must have individuals in key positions that are ready and able to address needs in a creative fashion and being totally student-centric. To be truly a performance based organization, these individuals should be able to demonstrate flexibility in management and administration of all Federal student financial programs -- that will thus enable schools to perform the tasks needed to deliver financial aid properly and adequately. Student loan debt forgiveness programs are vital in attracting quality and qualified individuals to many roles, i.e., teachers. We must continue these programs, so these vocations attract and keep very capable and skilled individuals. How does the growth of student loan debt affect the economy? I fear for many students. But we must be reminded -- most do not borrow large sums of student loans. The average indebtedness remains relatively low, and thus should allow students the wherewithal to repay these without many issues. Any debt an individual has impacts other things. Often, students can’t purchase the car they wish, or purchase a house right out of college -- these may impact the economy somewhat, but should not to a large degree. Don’t get me wrong -- the debt totals are alarming and as aid administrators, we should be given the ability to limit borrowing and to counseling appropriately and adequately. How should students and their parents think about the return on investment to spending on higher education? I continue to feel that an investment in an education is worth it, and should be sought. Do I think all students should attend college? No -- but I continue to feel that the return-on-investment allows students to earn a higher wage, and thus enable them and their families to be more secure. Kris James Mitchener Robert and Susan Finocchio Professor of Economics at Santa Clara University Kris James Mitchener What tips can you offer students looking to minimize the amount of debt they take out for higher education? Minimizing debt involves many individual choices that are hard to generalize across families. These would include: how much savings does one have prior to starting college (parents, relatives or one’s own), and how much one wants to work during school. The federal government subsidizes certain types of work while in school, through programs such as federal work study, and this program allows one to convert financial aid offered in loan to work, while in school. Of course, there are trade-offs. If working more during school means a longer time to completion, then one must weigh the cost of the additional time spent in school. One must also balance hours worked versus hours learning. More work necessarily implies fewer hours for everything else. Some students clearly view the opportunity cost of working as lower in the summer, than during the academic year. 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? People borrow for all sorts of things, and investing in human capital is one of the highest return activities an individual or society can undertake. It leads to higher living standards in the long run, by raising productivity of workers, so in theory, it is a worthwhile investment. If people could not borrow for purchasing assets or investing in their skills, the costs to society would be enormous. How does the growth of student loan debt affect the economy? As a matter of observation, the price of services grows more quickly than manufactured goods. What drives down costs is productivity change, but that’s hard to do with things like healthcare, performing arts, and education. William Baumol identified this years ago with his piece on “cost disease.” You might have a look at the original as it’s a good read, but here’s an Economist piece on your query. How should students and their parents think about the return on investment to spending on higher education? Students would be wise to think about smoothing their debt over their lifetime. They are trading off current income for expected future higher income. As long as the rate of return on additional education, as it relates to lifetime earnings, is higher than the interest rate they pay on the debt, then this should offer them a positive return. For each additional year of schooling, students earn about 6-7% more in terms of lifetime income. So, foregoing income to go to school still tends to be a good investment, as long as normative times for completion are met. That said, some career choices (and potentially majors) are more likely to earn a higher return than others. Economists have also been highlighting how skill complementarity with technology is extremely important for reaping such returns. Korok Ray Associate Professor of Accounting in the Mays Business School at Texas A&M University Korok Ray What tips can you offer students looking to minimize the amount of debt they take out for higher education? Pick a major that has long-term employability. Currently there is a secular shortage in STEM skills. This may not minimize the amount of debt, but it will allow the student to repay that debt quickly with good job prospects. This means picking majors like Computer Science over Gender Studies. 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? The government should condition the size of the loan based on field of study. So, allow bigger loans for STEM fields. Also, the return from a degree in a technical field is less sensitive to university quality than for a non-technical field. For example, an engineering major out of Texas A&M does as well as an engineering major out of the University of Pennsylvania, but an English major does not. This is another reason to condition the loan amount on field of study. How do we slow the growth of higher education expenses? University administrators have increased in both price and quantity over the last twenty years. Rather than force universities to hire fewer administrators, ask states to require their public universities to disclose the total cost and number of administrators relative to faculty to the marketplace. This disclosure can then be used in university rankings, with more efficient universities (with lower administrator to faculty ratios) ranked higher. Once the public universities disclose, private universities will follow suit. How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? The main proposal is a decrease in student loan funding of roughly $143 billion. This will make progress in reducing the enormous amount of student loan debt currently held by U.S. households. However, two things need to happen in addition. First, universities need to control their costs, and second, students need to shift into more economically relevant careers, like STEM. Shrinking the student loan programs is a step in the right direction, because it reduces the huge debt overhang, and puts more financial incentive on students to pick majors that will have economic value after graduation. How does the growth of student loan debt affect the economy? According to the Federal Reserve, student loan debt is the second largest class of household debt outside of mortgages. There is a risk of a student debt bubble similar to the housing bubble of 2007-2008. In general, modest amounts of debt are fine. However, excessive debt loads that cannot be repaid can have pernicious consequences, if those effects ripple through the economy. This is what happened with the housing crisis in the last major recession. This is especially true because the taxpayer is largely on the hook, as the government is the main lender in student loans. If the excessive debt levels continue to rise, then this will place undue burden on taxpayers, and likely to result in higher taxes in the future, which will drain economic output and dampen growth. How should students and their parents think about the return on investment to spending on higher education? The best ROI to a higher education is to provide a mix of technical and liberal arts skills. As I said, the STEM shortage is real, so majoring in STEM is a great way for immediate and long-term employability in the information economy. At the same time, liberal arts matter because creativity and problem solving in the future will still be important. Josh Harris Lecturer and Academic Advisor in the Department of Finance at Clemson University College of Business Josh Harris What tips can you offer students looking to minimize the amount of debt they take out for higher education? Students (and their parents) should shop around for the best value amongst the schools the student wants to attend. There’s a lot to be said for students attending the school that “feels” right. But students (and parents) should remember that the feeling may not mean much if you’re swamped with debt afterwards and have little means to repay it. Students can sometimes negotiate with the Financial Aid office of their school after their award has been announced. If another student decides not to attend the school, there’s unused aid they may be able to re-administer to other students. While in school, students should consider taking on a part-time job for a couple of reasons: it’ll help when you’re applying for a full-time position to show you can balance school and work, you can save up money for after school, but more importantly, a part-time job will allow you to save up money to pay the interest on your student loans while you’re in school, and possibly avoid taking out loans for subsequent semesters if you’ve saved up enough to cover tuition. 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? It would make sense for there to be caps on the amount a student could borrow based on their potential earnings. But sometimes this is tough to measure, because students may change job fields after graduation. And more importantly, the need for one kind of a career may boom many years after graduation, or even be created years after. And basing student lending limits on the quality or the university might lead some schools to focus more on beating their peers’ numbers, than improving their students’ future success in the career fields. I think a practical solution would be to increase the amount of education and awareness on the students’ end when they’re still in high school, looking at future careers and potential schools. If a student understands their future career may only pay $40,000 a year, they should then understand the lifestyle choice if they take out $80,000 of student loans to get there. How do we slow the growth of higher education expenses? We’ve actually seen many schools’ tuition increases slow down compared to a decade ago. Now they’re still increasing, but at slower rate and much closer to the general rate of inflation. Where we’re seeing larger increases is in extra fees, and other costs associated with being a student. The cost of housing, food, transportation and books are all going up still, at a much higher rate than general inflation. However, universities should still have a mandate to keep tuition manageable for the quality of education they’re delivering. A large part of this can be accomplished through managing efficiency in their programs. And students should be smart about their budget for non-tuition items while in school. If a student chooses an apartment that’s $50 or less per month for 4 years of school, that’s more than $1,800 savings. How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? There’s a lot of concern about universities’ budgets being cut anymore. The reality is that since the depression, universities have been moving more toward independent funding, rather than being state funded, or even state-assisted. This means that universities have been attempting to operate more like independent businesses than departments of their states. The administration’s proposed policies would have more of an impact on student borrowing levels and rates of interest, as well as the possible elimination or severe amputation of the Federal Loan Forgiveness Program. If there are less funds available, at higher rates, and more strict repayment terms, this will all lead to higher levels of student loan debt in the future. How does the growth of student loan debt affect the economy? It’s a simple formula for a post-graduation professional, income must match their expenses. If an expense category is eating up a large portion of their budget (in the form of high student loan payments), there’s not a lot they can do about it until that expense is gone (i.e., paid off). This means they have less discretionary cash flow to spend on other items. These items might be trivial in nature. Or, they might be items like the down payment on a home, pursuing more education and training, traveling, buying a car or even starting a business. All of these items I’ve listed are major drivers of the economy. So yes, increased student loan levels do put a damper on the economy. How should students and their parents think about the return on investment to spending on higher education? I think it’s smart for parents and students to think of higher education as an investment. But there’s fallacy in that logic if we’re expecting our “investment” to return a percentage on our money, like an investment in a mutual fund or ETF would. Instead, we have to remember that pursuing a college degree is as much about the degree as it is about preparing for a career, learning more about oneself on their own, and experiencing new things. College is a time to grow and mature. And sometimes, the return on that particular investment can take years and should never stop. Jeffrey S. Podoshen Associate Professor of Marketing at Franklin & Marshall College Jeffrey S. Podoshen What tips can you offer students looking to minimize the amount of debt they take out for higher education? Be mindful of purchases that are incidental to your education. For example, so many students and parents buy way too many items for dorm rooms in terms of technology and furnishings. Buy only necessities before you actually move in as a first-year student. Then, after you’ve settled in, you’ll have a much better grasp of what you really do and do not need. I’ve seen so many freshmen overspend in their first semester of college, and its completely unnecessary. 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? I would be against government limitations on the ability to borrow a certain amount of money, as that could have a significant result on what colleges would be able to actually offer in terms of educational programs. I am certainly for a discernable and appropriate standard that colleges have to meet in order to have their students qualify for financial aid, but it would not be based on some type of “employability” metric. While many institutions have a vocational focus, many in the liberal arts do not, and students may not be focused on “employability” or “pre-career training” in their desire to attend high-quality liberal arts colleges, or universities that offer classic curricula. The other problem is in terms of actually measuring “employability.” This is mistakenly synonymous with “skills,” and again, that’s not always the case. Many firms, including the top firms in the business and consulting world are not necessarily looking for students with specific applied skills, but rather high quality of mind and ability to solve complex problems. As I tell my students, in my days, when I was employed by one of the top global management consulting firms, I was managed by a person with a degree in Comparative Literature. How do we slow the growth of higher education expenses? We can slow the growth of higher education expenses in a number of ways. First, there is too much emphasis and investment in non-academic programming, largely in the areas of Housing and Student Life, that provide little return for the students and the institution they attend. Many of these Student Life programs are politically-oriented, and conceived by non-teaching staff who have a particular agenda. These programs are sparsely attended, but costly. Additionally, these programs often lack critical and dialectical thinking components, which puts their quality far lower than what a student is likely going to find in a classroom. Along the same lines, speaking fees for some of the “big name” speakers has gotten out of control. While it’s really great to have a former famous politician speak on your campus, does one speech really justify a $50,000 price tag? Likely not. Secondly, a large number of colleges were sold on the “cost savings” of outsourcing a number of functions, including dining services, transcript services, facilities and technology management. Many of these outsourced providers have underperformed and overcharged, and often have very generous contracts with low-service level expectations, and few repercussions for failure to deliver on promises. More alarmingly, many colleges also outsourced things like endowment management and benefits with firms that were unproven in the marketplace, and lacked appropriate experience with large institutions. This resulted in significant losses and excessive costs for many universities. It has taken a great deal of time to recover. Excessive regulation and federal regulatory overreach was a costly hallmark of the Department of Education over the past two decades. This has resulted in exorbitant costs, with almost no change in experience or educational quality. There were a few bad apples in the realm of higher education, but the collective type punishment administered by extreme oversight at the federal level really hurt more than it helped. Money that could have gone to instruction instead went to compliance with absurd and vague interpretations of federal laws and regulations. How should students and their parents think about the return on investment to spending on higher education? Students and parents need to focus on the actual classroom experience the student will receive. They need to focus on teaching methods that mesh with specific needs, and not be so concerned about costly amenities a college might provide. Yes, it might be nice to have hot tubs and saunas for student use, and it might be quite nice to have four fitness centers instead one large fitness center, but those amenities are not going to mean much in the greater scheme of things. Gyan Pradhan Professor of Economics in the Department of Government and Economics at Eastern Kentucky University Gyan Pradhan What tips can you offer students looking to minimize the amount of debt they take out for higher education? In order to minimize debt, students should shop around for the least expensive colleges, and those that provide the most scholarships. Many state universities are usually much cheaper for state residents, for instance, and also provide a variety of scholarships and incentives for in-state students. It does not make much sense to get into tens of thousands of dollars of college debt in order to earn an undergraduate degree. The cost of attendance should be an important factor in choosing a college. The choice of major and overall academic performance in college is also extremely important, because not all degrees are equal. 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? Yes, although setting a specific ceiling will be difficult, because the cost of attendance varies considerably. Setting limits based on the quality of the institution and potential for employment is likely to be too arbitrary and impractical. The federal and state governments should increase funding for grants and scholarships, and provide low-interest loans to students to make education more affordable and accessible. State governments should make concerted efforts to provide free college education to state residents, as this is the most effective way to educate its residents and raise productivity, which are keys to improving living standards in the future. How do we slow the growth of higher education expenses? As indicated above, more federal and state government subsidies for higher education will be helpful. Further, investment in academic programs should be the single most important priority for academic institutions. For the overwhelming majority of academic institutions, spending in non-academic areas, such as college administration, athletics, and facilities should be accorded significantly less priority. Evidence suggests that massive growth in spending in such non-academic areas have contributed significantly to the inordinate growth in higher education spending. How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? The general thrust appears to be toward budget cuts for higher education, which is exactly the opposite of what is needed. Higher education needs to be accorded more funds, not subject to budget cuts. How does the growth of student loan debt affect the economy? This growth can have serious adverse impacts on the economy. When students are saddled with large amounts of debt, this burden impedes their ability to buy homes, cars, and other goods and services. This reduction in consumer spending can be a significant drag in an economy, in which household consumption expenditures make up 70 percent of GDP. Student debt also reduces the amount that can be saved for retirement. This reduction in saving will result in lower living standards in the future. Finally, student debt can also have a negative impact on the number of business ventures and innovations, with adverse consequences for the economy. How should students and their parents think about the return on investment to spending on higher education? Spending on education is one of the best investments a family can make. People with college degrees earn significantly more than those with just a high school diploma. Further, the unemployment rate for college graduates is much lower than the average unemployment rate. That said, the returns to investment in education are inversely related to the cost of attending college. Finally, not all degrees are the same, and the choice of major will have a significant impact on the return on investment. David C. Bloomfield Professor of Education Leadership, Law and Policy at Brooklyn College and The City University of New York Graduate Center David C. Bloomfield What tips can you offer students looking to minimize the amount of debt they take out for higher education? Make use of local resources, high school counselors can help. Many civic organizations, like Knights of Columbus, Kiwanis, Chambers of Commerce, etc. maintain underutilized scholarship funds. Colleges themselves administer specialized grants for left-handed Anthropology majors and more. The point is to ask. 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? Government should require publication of verified data on full-time and part-time employment within one year of degree completion, as well as graduation and retention rates, with cutoffs of state and federal aid for bottom feeders. As important, the Feds should take back aid programs from private lenders to reduce the costs of borrowing. How do we slow the growth of higher education expenses? Much of the increased expenses in higher education are in administration and add-on amenities, such as extensive recreational infrastructure, beyond the instructional mission. Publication of administrative salaries, faculty-administrative ratios, and breaking out tuition and fees based on instruction, administration, and capital expense would at least bring transparency to spiraling costs borne by students, parents, and the general tax-paying public. How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? The Trump administration's personnel and policies surrounding higher education finance and related student borrowing presage an era favoring deregulated for-profit providers and lenders, with increased costs with little return for students and families. How does the growth of student loan debt affect the economy? Someone will pay the price, with far-reaching costs to those left holding the bag. How that shakes out among individuals, higher education institutions, lenders, and government remains to be seen. How should students and their parents think about the return on investment to spending on higher education? Completed degree programs from reputable institutions are still the most reliable investment in future income and wellbeing. Of course, there are no individual guarantees, but overall, with thorough research and program persistence, students and parents are well-advised to pursue quality post-secondary education. Dan Davenport Director of Student Financial Aid Services at the University of Idaho Dan Davenport What tips can you offer students looking to minimize the amount of debt they take out for higher education? Create a financial plan/spreadsheet to know what your costs are, know what your non-loan resources are, and then, if you are short on funds, look at loan options. Do not just borrow whatever loan amounts you are offered. Show this calculation out for the number of years it will take for you to get the degree, so you can see what commitments you have for resources (like summer work savings), and what your total loan debt may be when you get your degree. It may be adjusted as life happens, but have a financial plan to degree. When you are in school, live like a student. When you graduate, you can live like an employed professional. Don’t try to live like an employed professional when you are a student. Remember, student loan payments will take away from your resources when you are out of school, affecting the way you may want to live after graduation. 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? Borrowing to get a degree is an investment in the future. No different than buying a stock. The student is the stock, we all (student, parents, government, institutions, states, scholarship donors) are investing in hoping for good returns in the future. Students with a degree have a much better chance to show good returns, both financially and socially. Limiting resources for students that need them to be successful decrease the chances of the stock performing in the future. Lowering loan limits for undergraduate students will prevent some low-income students from getting a degree. If we set loan limits based on degree earning potential, we are preventing some low-income students from obtaining a degree in certain fields (education, social work, etc.). Limiting choice for students based on their family’s financial status is just a bad idea. We need to do a better job of educating students on borrowing, using effective programs, and not just a loan counseling process they just check through. What we do need to do is clean-up our education system. Having programs/degrees/institutions that do not provide a product to a student that will help them advance to employment and career goals is not helping anyone. We need to work harder on getting students through to graduation, so they can show a return on our investment. These actions will be more effective than limiting loan eligibility due to degree/field or institutional quality. How do we slow the growth of higher education expenses? For public institutions, decreased state support does present a challenge. We also need to remember that the cost of going to college includes much more than tuition and fees. Rent increases, food increases, and transportation increases are all part of the cost of attendance. Most of the time, institutions do not have control over these costs. How will the policy proposals of the Trump Administration impact student borrowing and higher education finance more generally? Decreasing support for students can only decrease their productivity down the road. We cannot afford to hurt our future. We also need to assure that the loan repayment processes provide opportunities for students to be successful in starting their career. Changing policies that increase the default rate will not help anyone. That said, we need to continue to improve the financial aid programs to be more efficient and effective. Deregulation of the programs will help schools use resources to directly impact school. The current practice of increasing regulations for all to control a few bad schools is not helping anyone. Get rid of the bad schools, and let the good schools do their job. I do think we need to look at scaling back the public service forgiveness program. We are going to see abuses in that program, where higher income people are going to have some of their loan debt forgiven, which is not a good use of our tax dollars. I would rather see cuts in that program and use the savings to help students get through college. Hopefully, when they get a degree, they will have the income to make their loan payments. We also need to get the graduate PLUS program under control, so graduate students are not borrowing large amounts in the PLUS program just because they can. How does the growth of student loan debt affect the economy? First, students getting a degree will help the economy. Even with moderate loan repayments, they will still make a positive economic contribution. That being said, every dollar paid for a student loan is a dollar taken out of expendable income. Their degree is a long term investment, so we need to look at the long term effect on the economy, not just the loss of spendable income during their first 10 years out of school. It is time for us to look at student loan debt as a given for most students. It is almost like reverse social security, and just as important for many. With social security, people pay now with the idea of collecting later in life. With student loans, students collect now and pay later. Both have a very significant effect on lives. How should students and their parents think about the return on investment to spending on higher education? As I said earlier, the student really is a stock we are all investing in. If we make smart decisions, work hard, and get the degree, the stock value will grow. Data shows higher wages and lower unemployment for degree holders. Improved lifestyle though better health, being more involved in the community, and caring about the direction our country is going in are many times overlooked as return on investment. We also need to look at the contribution the successful student provides to society, and what we will provide to their future children. Many do not hesitate to borrow to buy a house or car, so they can live as they would like. Student loans are not different, except they may have a more significant effect on success/lifestyle than any loan a person may take during their lifetime. We just need to borrow smart. We also need to think of their future retirement, not just work earnings. Having a degree will have a very significant effect on a person’s retirement. The degree is truly a lifetime game changer.

Methodology

In order to determine the best and worst states for student debt, WalletHub’s analysts compared the 50 states and the District of Columbia across two key dimensions, including “Student-Loan Indebtedness” and “Grant & Student Work Opportunities.”

We evaluated those dimensions using 10 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 being granted to the state with the most student debt.

Finally, we determined each state and the District’s weighted average across all metrics to calculate its total score and used the resulting scores to rank-order our sample.

Student-Loan Indebtedness - Total Points: 85
  • Average Student Debt: Double Weight (~14.17 Points)
  • Proportion of Students with Debt: Full Weight (~14.17 Points)
  • Student Debt as Share of Income: Double Weight (~28.33 Points)
  • Share of Student Loans in Past-Due or Default Status: Full Weight (~14.17 Points)
  • Share of Student-Loan Borrowers Aged 50 & Older: Full Weight (~14.17 Points)
Grant & Student Work Opportunities - Total Points: 15
  • Unemployment Rate Among Population Aged 25 to 34: Full Weight (~3.75 Points)
  • Underemployment Rate: Full Weight
  • Availability of Student Jobs: Full Weight (~3.75 Points)
  • Availability of Paid Internships: Full Weight (~3.75 Points)
  • Grant Growth: Full Weight (~3.75 Points)

 

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Institute for College Access & Success, Federal Reserve Bank of New York, Council for Community and Economic Research, U.S. Department of Education College Affordability & Transparency Center, Internships.com and Indeed.



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