The findings suggest that looking beyond salary alone to factors like job growth stability and cost of living is essential for long-term financial health and successful loan repayment.
A new analysis reveals that the challenge of repaying student loans is deeply tied to geography, with economic conditions in some states creating a far more favorable environment for borrowers than others. A vital resource for recent grads considering their financial future, the list highlights the sharp differences between the heartland and the coastlines based on a variety of criteria, including cost of living, job growth, and salary.
According to the study by U.S. News, South Dakota ranks as the number one state for student loan repayment. It achieved this top spot by boasting the lowest historic unemployment and delinquency rates, combined with a competitive average debt per borrower and a favorable cost of living (price parity). North Dakota follows closely in second place, aided by having the lowest average student debt in the country, at under $30,000 per borrower. The analysis highlights a strong trend: states in the Midwest and Mountain West, with their robust job markets and lower living costs, generally provide the best conditions for borrowers. An exception is Maine, which cracks the top ten (ranked No. 9) due to its very low delinquency rates.
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On the opposite end of the spectrum, the District of Columbia ranks as the most challenging place to repay student loans. Despite residents having the highest personal incomes in the nation, they also carry the highest average debt—$54,561 per borrower. D.C. also ranked last for job growth, unemployment, and price parity, creating a perfect storm of financial pressure. Mississippi ranked second-worst, hampered by the lowest average incomes and the highest student loan delinquency rates in the country.
The study underscores a critical insight: the sheer size of a loan balance is less important than the borrower's ability to pay it. For example, while states like Maryland and Virginia have high average debts, their high incomes help offset the burden. Conversely, borrowers in Southern states like Georgia, Florida, and Texas may have lower absolute debt than those in D.C., but because of lower per capita incomes, a larger percentage of their monthly earnings must go toward loan payments. Delinquency and default rates in these areas rise as a result of the increased relative burden.
The ranking was determined by analyzing six key categories that influence a borrower's financial health:
Hiring Growth: Indicates where new jobs are being created (e.g., Nevada, Florida).
Unemployment Rates: The Midwest has the least stable work market.
Price Parity: Shows how much money is spent on goods and homes (best in the Midwest and South).
Personal Income: Determines repayment capacity (highest on the coasts).
Delinquency Rates: Shows where borrowers are actually failing to pay (lowest in South Dakota, Maine, and Idaho).
Average Debt per Borrower: The baseline amount owed.
The combination of these factors, a strong job market, low living costs, and solid incomes, is what propels states like the Dakotas to the top.
Disclaimer: This information is based on inputs from news agency reports. TDG does not independently confirm the information provided by the relevant sources.
