Exploring Student Loan Debt

Across the nation, a new cohort of students is graduating from college. Although this is a time of celebration, many of these students must also begin to reckon with the debt they have accumulated during their studies. In 2015, 68 percent of students graduating from four-year colleges had student loan debt, with an average debt of $30,100. Though these numbers are unlikely to surprise students or their parents, they serve as a framework for researchers and policymakers to understand the extent of the issue. Bachelor’s degree holders with debt are less likely to own homes than those without debt, and research from Brookings suggests that nearly 40 percent of borrowers may default on their federal loans within 20 years.

Like most issues, this one has a geographic component. To help better understand the geography of student debt, we have data from The Institute for College Access and Success (TICAS), which is updated to include the 2015-2016 academic year.

TICAS created this dataset as part of its Project on Student Debt. The map below shows the average debt of graduating students for each state, as well as the percent of graduating students who have student debt. The data is tabulated by the state of the school, not where the student lives after graduation. It’s also important to note that TICAS doesn’t include for-profit schools in its calculations, since virtually none of those schools reported debt data. Since students at these schools are disproportionately saddled with debt, you should keep this caveat in mind when analyzing the TICAS dataset.

Student Debt by State

Why do students in some states, like Connecticut, have so much more debt than students in other states, like Florida? The obvious reason is probably the cost of college in those states. Looking at cost-of-college data from the National Center for Education Statistics (NCES), the average total price for in-state tuition at public universities in Connecticut is $25,456, but in Florida it’s only $15,309.

Similarly, the prevalence of private non-profit schools has an effect. Connecticut has double the number of private colleges compared to public ones, while Florida has half the number of private schools as public schools.

But what about the number of students who will need assistance to pay for a public school? According to TICAS, “Nationally, families that earn $30,000 or less would need to spend 77 percent of their total income to cover the net price at public four-year colleges, more than double the burden placed on any other income group.”

The map below shows the variation in median family income by state, with Connecticut families earning $91,274, and Florida families earning only $59,139. Shouldn’t it be the other way around though, if students in Connecticut have more debt? Not necessarily. Student loan debt is reported by school, so the debt of a student at Yale who’s from Pennsylvania would be attributed to Connecticut in this data. Median income, however, is reported based on residence, so that same student’s family income would be attributed to Pennsylvania.

Of course, there are many additional reasons why student debt is higher in certain areas, so this can serve as a starting-off point for looking into those variations.

Preview of What’s Coming

Prospective students have even more to worry about, though. Interest rates for federal loans will increase starting July 1st, and if the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act passes, the government will stop offering subsidized loans, eliminate Public Service Loan Forgiveness, and get rid of forgiveness in income-driven repayment plans.

With these potential changes on the horizon, it is increasingly important to understand where students are most burdened, and which states are most in need of reform.

Student loan debt data is available to all PolicyMap users, and can be accessed in PolicyMap’s “Education” menu.