Posted by: Richie Bernardo

“Location, location, location” is the most important phrase in real estate. But the mantra applies to education, too. 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 10.7 percent of all student-loan debts 90+ days delinquent or in 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 have a high average salary for a certain profession, but the high cost of living could outweigh the gains.

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 2018, total outstanding college-loan balances disclosed on credit reports stood at $1.41 trillion, according to the Federal Reserve Bank of New York.

There is evidence that income potential rises and chances of joblessness decline with more schooling. But 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 compared the 50 states and the District of Columbia based on 11 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, 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="https://ift.tt/2vrrqEL>

 

Student Debt by State

Overall Rank*	State	Total Score	‘Student-Loan Indebtedness’ Rank	‘Grant & Student Work Opportunities’ Rank
1	South Dakota	71.41	1	35
2	West Virginia	68.16	3	3
3	Pennsylvania	66.95	4	11
4	New Hampshire	65.15	2	43
5	Ohio	63.84	6	10
6	Mississippi	62.22	7	9
7	Michigan	60.28	9	12
8	Minnesota	59.13	5	49
9	Iowa	59.09	8	28
10	Indiana	56.53	10	20
11	Kentucky	55.79	17	2
12	Delaware	55.52	12	5
13	Kansas	54.07	13	18
14	South Carolina	53.93	14	16
15	Wisconsin	53.57	15	17
16	Vermont	53.01	11	38
17	Idaho	52.38	16	25
18	Montana	51.66	20	19
19	Georgia	51.40	19	23
20	Connecticut	49.63	18	41
21	Alabama	48.41	28	6
22	Rhode Island	47.77	23	30
23	Illinois	47.43	22	37
24	Tennessee	47.33	25	21
25	Nebraska	46.85	24	27
26	Missouri	46.04	21	45
27	Arkansas	45.55	30	14
28	New Jersey	45.09	26	39
29	North Carolina	44.61	33	7
30	Oklahoma	43.16	35	8
31	Maine	42.00	27	51
32	North Dakota	41.76	31	40
33	Oregon	41.64	34	24
34	Massachusetts	41.28	29	50
35	Texas	41.23	36	22
36	Louisiana	40.18	39	13
37	New York	39.05	32	48
38	Virginia	37.94	38	42
39	New Mexico	37.31	40	31
40	Colorado	37.15	37	47
41	District of Columbia	36.57	41	34
42	Nevada	35.40	43	4
43	Maryland	34.36	42	44
44	Florida	32.74	45	15
45	Alaska	31.88	47	1
46	Arizona	31.82	44	32
47	Washington	30.18	46	26
48	California	25.22	48	36
49	Wyoming	24.66	49	33
50	Hawaii	15.60	50	46
51	Utah	13.77	51	29

*No 1 = Most Student Debt  

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="https://ift.tt/2vrrqEL>  

Ask the Experts

Having more student debt than one can handle can produce significant troubles 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 policies set forth by 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?

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• Charlie Kelley Executive Director, RI Student Loan Authority
• Paul R. Harrison Assistant Teaching Professor, School of Accountancy, University of Denver
• Margaret P. Reed Department Head, Professor – Educator of Accounting, Carl H. Lindner College of Business, University of Cincinnati
• Fred Selinger Lecturer, Haas School of Business, University of California, Berkeley
• Manisha Thakor CFA, CFP®, VP, Financial Education, Brighton Jones
• Diane Usher Director of Financial Aid, Roger Williams University
• Sharon C. Allen President & Co-Founder, Sterling Wealth Management

Charlie Kelley Executive Director, RI Student Loan Authority

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

There are a number of ways that students and families can avoid over borrowing for higher education.

File the FAFSA financial aid form and apply for local scholarships where the student has a better chance of actually receiving one, even small scholarships add up!

Consider attending a community college for the Freshman and Sophomore years to complete introductory classes and then transfer to a four year institution. A student and family can avoid tens of thousands of dollars of debt and your diploma from the four year college will not have an asterisk saying where you spent your first two years.

Carefully compare award letters from the different colleges before committing to make sure that “great financial aid package” is not primarily loans.

Sometimes the more expensive schools actually can end up costing less if they provide generous merit or need based aid.

Focus on completing your degree on time, take summer classes if necessary.

How do we slow the growth of higher education expenses?

Over the last several years we have seen students and families become much more savvy consumers of higher education and the rate of tuition increases has already declined to a much more reasonable rate.

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

Yet to really see what those policies are…

How does the growth of student loan debt affect the economy?

Higher education is still the best investment an individual can make, but like with any investment you need to do your homework BEFORE investing.

How should students and their parents think about the return on investment to spending on higher education?

RISLA advises students that the MAXIMUM amount that they should borrow over their college career should not exceed 90% of their expected starting salary.

The Rhode Island Student Loan Authority (RISLA) recommends that students first use the federal direct loan, but for most freshmen the limit is $5,500 and if families need additional funding RISLA has one of the lowest fixed rate education loans in the country at 3.99% with the auto pay (ACH) discount (and no fees). By comparison the federal parent PLUS loans has a fixed rate of 7.60% (7.35% with ACH) and an upfront fee over 4.2%. Over the standard ten year repayment period a RISLA loan will save families 25% of what they borrow ($5,000 on a $20,000 loan).

RISLA is the only lender other than the federal government that offers income based repayment as a safety net should the borrower experience a financial set back such as unemployment or medical issues. RISLA will also forgive the loan if the student passes away or become permanently disabled under the US Dept of Education guidelines.

This loan is available to qualifying RI residents regardless of where they go to school and the families of students attending any of the high quality institutions in RI.

An exciting new thing (I think we are first in the education loan space to do this) we launched this Spring was a text based pre-approval and application process, the key to which is that it utilizes fraud prevention and credit databases to make applying on a smartphone practical and quick. See attached press release.

We call it “text to college” and you can try it by texting the word “college” to the number “24000”. While you can use your own info to get pre-approved and it will not impact your credit score (it is called a soft pull) you may still feel more comfortable when it asks for the last four digits of your social security number use four “A”s instead “aaaa”. However, DO use your real email address so you can relieve the confirmation email from us.

Paul R. Harrison Assistant Teaching Professor, School of Accountancy, University of Denver

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

The best tip for anyone looking to minimize their debt, is to not get into debt in the first place. That aside, the idea of debt is, perhaps, never fully explained to most college students: you are making a deal with your future self that you will pay much more in the future for getting an education today. Anyone taking on debt needs to understand what they are getting in the deal. If the idea is that a college education will help land a better job with a better company for higher pay, some rough calculation needs to be done in order that the debtor will be able to earn enough to pay back the debt. So what are the job prospects? What is the likely pay? How much of a future paycheck is the student willing to use to pay back debt?

While some student debt can be a good thing, because it causes the student to have skin in the game, too much can wreck a career and life quickly. Finding the right balance is an individual and challenging process.

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?

While it is important that our government support higher education, I don’t believe that any hard limits on education grants, loans or other monetary support is the best way to accomplish the goal. The interest rates charged, along with the proper disclosures to the potential debtor, in combination with private (non-government) lenders is a better solution. But, this solution rests on the debtor understanding what the costs of the education today are.

How does the growth of student loan debt affect the economy?

Like any debt, student loan debt brings forward in time the payment of future expenses (get an education now, pay for it later versus get an education later when you can pay for it). This speeds up the economy today and as long as the debt is paid as agreed, has a lesser drag on the future by having a more efficient workforce today. In the aggregate, unpaid student debt is of concern – just like any unpaid debt. Unpaid debt breaks trust and broken trust is a drag on the economy – namely in the form of higher interest rates on future borrowers.

How should students and their parents think about the return on investment to spending on higher education?

Treating the cost of an education like a return on investment is not a bad way to think about it. However, there are distinct problems with taking that thought process to extremes. First, students are not to be treated as consumers. Their tuition is not the purchase of a grade, but an experience. Depending on how they choose to take advantage or not of that experience is the result of a grade. Second, students (unlike consumers) are not always right. The idea of a university is that a group of people are doing their level best to pass along what they have learned (or should have learned) in their education. Lastly, the return has far more to do with the student, than the institution. While the best and brightest from any institution will undoubtedly succeed, the institution’s name and reputation can open a few more doors, but it is the make-up of the student who will get to walk through those doors and find their rewards.

Margaret P. Reed Department Head, Professor – Educator of Accounting, Carl H. Lindner College of Business, University of Cincinnati

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

The best way for students to minimize debt is to create a budget of expenses for the next semester or academic year, not forgetting that they may need summer money to supplement their summer earnings, if they are not in school. This is not an easy budgeting process and this is partly why students borrow too much and spend too much. The key here is to borrow enough money to get through the semester or year, but don't borrow extra, because it is too easy to spend it on non-essential items, like eating out, travel and impulse purchases.

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?

Basing the amount of borrowing on the quality of the university would be difficult to implement. However, the maximum borrowing amount could be capped based upon tuition plus average cost of living where the university is located. This would result in a higher maximum loan amount for a student at Columbia University in New York City than a student at Iowa State in Ames, Iowa. This would provide a realistic limit on how much debt the Iowa State student can borrow. Students change majors and career goals during their time at the university, so capping the amount of debt based on the degree or field probably won't work. In fact, students with the greatest debt loads are often the ones who have changed majors one or more times and have extended their time in school, resulting in higher debt load.

How do we slow the growth of higher education expenses?

Slowing the growth of higher education expenses is the most difficult question here. To some degree, the cost of higher education must follow general inflation trends in the economy. But there is a large element that mimics the same problem in rising health care costs. Every hospital network wants the best, most up-to-date equipment and facilities to attract more patients, but then patients have to pay the costs. Universities add lots of buildings and extra amenities to attract students and that pushes up the cost of higher education. It is a race to the top that drives costs higher, but failing to compete is not a winning proposition for universities, either.

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

The Trump Administration has proposed the following changes to student loans: reforming the income-driven repayment system, eliminating loan forgiveness for borrowers in public-service jobs, and eliminating subsidized student loans. Eliminated subsidized student loans means that interest will accrue on the loans while the student is still in school, resulting in higher debt upon graduation. The other two proposals involve the repayment of the loans. These changes make it harder to get out of the loans or to make smaller payments based on income, so they will drive up the post-graduation debt of students. I don't see any major changes to higher education finance.

How does the growth of student loan debt affect the economy?

This is a tricky question and I am not an economist by training. However, my guess is that the effect on the economy is determined by whether college graduates can get good jobs and pay off their loans. When the economy is good, graduates can get jobs with salaries that are high enough to allow them to pay off their loans. When the economy turns down, then college graduates, on average, have a harder time getting a good job and have greater difficulty paying off their loans. And to capture the entire economic effect, you would have to analyze the productivity of the college graduates, compared to similar workers who did not choose to go to college. Not an easy question to answer.

How should students and their parents think about the return on investment to spending on higher education?

My personal opinion, as a college professor teaching accounting, is that the return on investment to higher education spending is quite good, when the student spends the first two years casting about for a promising career, and then spends the next two years focused on that career and finishing the degree on time. There are some benefits to the years in college that are harder to access outside of college, like socialization in student groups, learning to balance work and social activities and the possibility of study abroad and internships. There is a lot of hard to value mentoring that goes on between older and younger students, but we know that employers do value it, when looking to hire employees. On the other hand, if a student hasn't figured out what career appeals to them after two years, they might be better off going to find a job and then coming back to the university later, when they have identified what they want to do. I work at a large state university and we have plenty of non-traditional students who come back to school when they know what degree they need. And whether they are part-time or full-time students, they know the value of a dollar and what it takes to earn it, and they generally do not have any problem with excessive student debt!

Fred Selinger Lecturer, Haas School of Business, University of California, Berkeley

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

Apply for every scholarship, grant, etc. you can. Part-time jobs can help. I washed pots and pans at a fraternity house for my meals. You might also consider taking summer courses that enable you to graduate in 3.5 years instead of 4 years. I recommend the amount of your student debt should not exceed what you estimate your first year's compensation will be 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?

The student loan program is a national disgrace. Our country needs to invest more in education. Too many wonderful teachers are giving up on low wages and leaving the classroom. Too many talented young people are being priced out of an education. They are our future. However, I believe there should be some low affordable cost required for college, university, and post-secondary education. Strange as it is, when given for free, some people tend not to work as hard as they do when they have" skin" in the game.

How do we slow the growth of higher education expenses?

Education must become a national priority affordable to all. Since the rich benefit the most from our economy, it starts with increasing their taxes at a more progressive rate and funneling that into education. Another way would be to allow those with student loans to refinance their student loans at lower rates. Why is it we can refinance our home loans, but not our student loans?

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

So far it seems the current administration does not view the best way to expand the economy is to help the poor through education and good healthcare, rather than lower taxes especially on the wealthy.

How does the growth of student loan debt affect the economy?

Our best and brightest now begin their careers smothered in national debt, student debt, credit card debt, mortgage debt, and raising kids they can't afford to send to college because they fear for their retirement needs.

How should students and their parents think about the return on investment to spending on higher education?

Parents can act now by becoming active in their school districts and beginning to put together a financial plan for education early in a child's life. In California we have a wonderful community college system which enables most students to live at home their first two years of college. I believe this is one of the reasons California's economy is the 5th largest in the world. Every state should do the same.

Manisha Thakor CFA, CFP®, VP, Financial Education, Brighton Jones

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

First and foremost, let go of the idea that “educational debt is good debt.” I’d argue that debt is a 4-letter word no matter WHAT it’s used for (including houses!) and you want to use it sparingly and only with good reason (same as you might for some of those not-for-print four letter words). I often see students taking out the maximum they're able to versus the minimum they need to. When it comes to what a lender offer you, just because you can, doesn’t mean you should. Your primary focus when taking on educational debt should be in clearly understanding how long, how many years of work in your chosen profession you will have to work to pay those loans off. Yes, taking out a reasonable amount of loads to fund your education is an investment in your future earnings power. But as with so many things in life moderation is absolutely key here.

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 absolutely do not think that the amount of loans a student can borrow should be linked in any way to the “quality of the university.” That is such a subjective measure. However I do support some type of metrics that limits student from taking out loans at a level that are completely unreasonable to pay back within say a 10-15 year time frame at the most. The real driver of whether a student will get a positive ROI on educational debt within a reasonable time period is a function of what field they enter into to (i.e. the pay structure of that profession) and the quality of the skills you will be brining to that job out of school – which is not a function of the “quality of the overall university’ but rather a function of the nature of the major and the quality of the professors in that department.

How do we slow the growth of higher education expenses?

I can’t help but notice on a number of campuses the housing, the cafeteria, the student centers, and the gym facilities are so nice that often a graduate can’t afford those items at a similar standard until they’ve worked a decade or so. So instead of cutting back on professors - or benefits to professors – I suggest institutions of higher learning take a long hard look at how much they are investing in these areas and what kinds of expectations they are setting up in students about how their post-graduation lives will look like. Now that would help stem some of the rapid growth in higher education expenses.

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

I can’t believe I’m about to find a silver in any action being taken by the current administration – but the limits on what has to be proven to dispute that one has been “duped” by an institution of higher learning may – and this is a stretch - may cause people to think twice about ow much they spend on educational programs vs teaching themselves by going say to a community college for the first few years and the transferring to a university of their choosing after that. But it’s a CLEAR blow to people who have already been sucked into that vortex of student loans that like the proverbial cockroach - just seems to never die no matter how hard you try to attack it.

How does the growth of student loan debt affect the economy?

Total student loan debt now eclipses total credit card debt (and unlike credit card debt student loan sticks with you through life even if you declare bankruptcy. What this means is that thousands to millions of students are graduating from school with a very heavy ball and chain right out of the gate. It’s not unheard of for students to have monthly loan payments that are equal to (and in the extreme cases) larger than mortgage payments. As such, many graduates are delaying home purchases ad even delaying getting married and/or having kids until their financial picture gets cleared up and the lack of spending in these areas really does add up and negatively impact our echoes. It’s a classic example of “the law of unintended consequences”.

How should students and their parents think about the return on investment to spending on higher education?

My rule of thumb is this: Don’t take out more in student loans than you expect to make ON AVERAGE over your first 10 years out of the program. There are some professions just as finance or law where there can be a very steep escalation in income over that first ten year period that can justify the higher loan balance because at a rate of paying off 10% a year of those loans, depending on the interest rate can have all that debt paid off in 10-12 years. By contrast, if you are going into a field where salaries peak out at $40,000 - taking out $60,000 in student loan means you will be forever behind the 8-ball… you just don’t earn enough to spend 10 years paying off interest and principal to the tune of 10% of the loan such that when you are ready to (pick you filler), get married have kids, buy a home… you are not having the double whammy of having to still pay monthly student loan payments.

Diane Usher Director of Financial Aid, Roger Williams University

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

• Start saving for college early.
• Do well in high school so that you can get high merit scholarships.
• Look everywhere for scholarships such as nonprofit volunteer clubs, religious organizations, and civic groups.
• Take out Federal Direct Loans before private education loans since they are typically less expensive.
• Pay the interest that accumulates on loans while you are enrolled.
• Complete the Free Application for Federal Student Aid (FAFSA) as early as possible.
• Make a budget.
• Avoid using credit cards with high interest interview rates and occasional fees.

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 already has set limits to the amount students borrow, although the maximum amounts have had little increase over the past 60 years. It would be difficult for the government to establish limits by the quality of the university and employability of the degree/field since the data constantly changes and can be several years outdated.

How do we slow the growth of higher education expenses?

Since 2012 at Roger Williams University, each incoming class has received a tuition guarantee for the duration of their full-time four-years of studies. This will decrease their higher education expense for by $9,000 to $15,000 over four years. This could help if all colleges and universities look at ways to cut expenses and pass it on to students.

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

Students would need to borrow more private loan funds, which would increase the overall amount of student loan debt.

How does the growth of student loan debt affect the economy?

• Fewer people are able to buy homes and cars.
• People are less likely to take business risks when they have a large amount of loan debt.
• Higher amount of delinquencies on student loans.
• With large loan debts, economic activity could have a sudden drop and businesses would cut back their investment spending and could cause loss of jobs.

How should students and their parents think about the return on investment to spending on higher education?

College degrees help families live more comfortably. The average student received financial return with a college degree. While employees with a high school education may secure jobs with good benefits, college graduates typically fare better, entering higher-level careers with greater salaries. They are also more likely to receive promotions, earn raises and develop reasoning and communication skills that typically apply to their jobs. College graduates aged 25 to 32 who are working full-time earn about $17,500 more annually than their peers who have only a high school diploma, according to the Pew Research Centre.

Sharon C. Allen President & Co-Founder, Sterling Wealth Management

What tips can you offer students looking to minimize the amount of debt they take out for higher education?

The adage “plan your work, then work your plan” pays huge dividends when it comes to creating a thoughtful approach to minimizing student debt for higher education. Here are some tips:

• Create a personal budget before setting foot on campus and find a system to track expenses that works for you (an app, spreadsheet or envelope system).
• While in high school, study for and take AP exams...scoring high enough will give you college credit and reduce the time you need to spend completing a degree.
• Start researching scholarships your sophomore or junior year of high school. When you get to college, the opportunities don’t stop so stay connected with your guidance counselors for scholarships that are available post freshman year in college.
• Consider attending a community college to take general education courses to save money. Some community colleges have “pathway” programs that will grant you admittance to a four-year college or university after completing the community college coursework.
• Don’t be afraid to work part time while in college. Connect with professors and guidance counselors for connections with alumni or friends of the program you are in for jobs and internships. It’s never too early to start building a network.

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 believe both of these approaches can be dangerous, laden with unintended consequences. It would be better to have more robust financial education for borrowers than for the government or other parties to get involved in creating mandates and measurements that can be misunderstood. 

How do we slow the growth of higher education expenses?

Slowing the growth of higher education expenses involves a robust approach from multiple angles. First, there should be better financial education in high schools that addresses practical personal finance strategies and the impact of debt (including higher education debt). This has the potential to lead to more thoughtful consumer decisions by college-bound students, who may end up as a result of this education, selecting less expensive avenues to get the tools and training they need which may have a ripple effect on those setting the cost of education. Second, higher education institutions need to continue to “think outside the box” when it comes to delivery of instruction and the overall college experience. Find ways to deliver world-class instruction for reasonable cost (e.g. online learning). 

How will the policies set forth by the Trump Administration impact student borrowing and higher education finance more generally?

The proposed cuts to Pell grants, work study programs, and eliminating loan forgiveness for public servants may slow the growth of college tuition as these forms of financial incentive would no longer be a form of government subsidy. However, the side effect could be the disincentivizing of students with less financial means, but great potential, from attending college. That potential trend concerns me.

How does the growth of student loan debt affect the economy?

Debt can be crushing to an individual’s personal and professional progress, which in turn can weaken economic growth if the debt crowds out investment in other areas. For example, delaying homeownership, marriage, or starting families may take a back seat to student loan debt repayment.

The growth of student debt can also have a social impact. An entire generation of college graduates, laden with the outsized burden of student loans, may end up putting their lives on hold in order to address this debt. This can present itself as reduced professional risk taking that might even have the potential to be more deleterious to the economy in the long run.

How should students and their parents think about the return on investment to spending on higher education?

Return on investment is exactly how families should discuss education spending! Areas that should be thought about critically as a student is evaluating their college path include collegiate/post-collegiate engagement, employment opportunities on graduation, and opportunities for meaningful educational opportunities in and out of the classroom.

There are many different ways to quantify return on investment, many of which are qualitative in nature (e.g. Are you a better person? Are you more well-rounded? Did you develop a good network?). Here is an exercise to consider for numerically quantifying “Higher Education ROI”:

• Where’s The Money? ...Once a student has identified a field or degree they are interested in, research potential future salary upon graduation with that degree.
• How Much Debt Will I Have? ...Identify the cost to attend your desired college, and how much will you finance.
• Calculate the Difference ...Project four years into the future after graduation from college. Compare four years of your projected future salary in your desired field with the debt accumulated over your time in college. If the earnings exceed the cost of attending, you have a positive “Higher Education ROI”.

Methodology

In order to determine the best and worst states for student debt, WalletHub 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 11 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 overall score and used the resulting scores to rank-order our sample.

Student-Loan Indebtedness - Total Points: 85

• Average Student Debt: Full Weight (~9.44 Points)
• Proportion of Students with Debt: Triple Weight (~28.33 Points)
• Student Debt as Share of Income: Double Weight (~18.89 Points)Note: This metric was calculated by dividing overall state-level student debt per borrower by median household income (adjusted for cost of living).
• Share of Student Loans in Past-Due or Default Status: Full Weight (~9.44 Points)
• Share of Student-Loan Borrowers Aged 50 & Older: Double Weight (~18.89 Points)Note: This metric was adjusted for the population aged 50 and older.

Grant & Student Work Opportunities - Total Points: 15

• Unemployment Rate Among Population Aged 25 to 34: Double Weight (~4.29 Points)
• Underemployment Rate: Full Weight (~2.14 Points)
• Availability of Student Jobs: Full Weight (~2.14 Points)Note: This metric measures student jobs per total civilian population aged 16 to 24 in the labor force.
• Availability of Paid Internships: Full Weight (~2.14 Points)Note: This metric measures paid internship listings per total civilian population aged 16 to 24 in the labor force.
• Grant Growth: Full Weight (~2.14 Points)Note: This metric measures the percentage change (2015 vs. 2014) in state- and local-government grants per in-district and in-state undergraduate student.
• Presence of “Student Loan Ombudsmen” Law: Full Weight (~2.14 Points)Note: This binary metric measures whether Student Loan Ombudsmen law was enacted or not in a state.

 

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, United Health Foundation, LendEDU, The Pew Charitable Trusts and Indeed.

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