As we wait for Friday morning’s highly anticipated Supreme Court ruling on President Joe Biden’s student loan forgiveness program, a new study shows which states have the highest and lowest student debt.
“These findings provide an intriguing insight into where student debt is most prominent throughout the country, and where in the country could benefit the most from President Biden’s proposed student loan forgiveness plan,” a spokesperson for CreditDonkey said, adding that at an estimated cost of roughly $400 billion, Biden’s plan to forgive student debt would be one of the most expensive executive actions in history.
Friday’s announcement will determine whether the Biden Administration can move forward with the controversial plan to wipe out more than a quarter of the country’s $1.7 trillion in outstanding federal student debt—which could entirely clear the loan debt of roughly 14 million people. Close to 40 million loan borrowers who could see $10,000 to $20,000 of their loan balances forgiven are waiting on pins and needles for the Supreme Court’s ruling on two separate challenges to the Biden plan.
States with the most student debt
According to the new research, conducted by banking experts at personal finance website CreditDonkey, residents of Maryland will likely be paying closer attention to the Supreme Court ruling Friday than residents of South Dakota. The study found Maryland has a higher prevalence of student debt than any other state, with an average loan debt of $42,543 per borrower.
At the other end of the scale, South Dakota has the lowest average loan debt per borrower. Only 12.9% of all South Dakota residents hold federal loan debt, which equates to an average of $28,218 in debt per student loan borrower.
The research compared all 50 states based on the most recent student debt data from the Federal Reserve Bank of New York to discover which states had the highest proportion of student debt per borrower.
With 864,700 student loan borrowers in the state, Maryland’s total federal student debt balance is $36,787 billion—equating to that average loan debt of $42,543 per borrower.
The study revealed that Georgia has the second-highest student debt on average, The Peach State has a total of 1,641,600 student loan borrowers, with an average loan debt of $41,826. Delaware ranks third, with a total of 137,300 student loan borrowers carrying an average of $39,238 debt per borrower.
Virginia ranks fourth with an average of $39,001 per borrower, while New York follows in fifth place with $38,668. The top 10 is rounded out by Florida ($38,653), Oregon ($38,248), Illinois ($37,869), California ($37,783), and Alabama ($37,730) respectively.
States with the least student debt
Behind aforementioned South Dakota ($28,218), the CreditDonkey study revealed that Iowa has the second lowest proportion of student debt per borrower, with 465,500 borrowers carrying an average of $29,845 of debt. Iowa has several student loan forgiveness programs, including specific programs for doctors, nurses, teachers, and other health care providers.
Alaska residents have the third lowest average student debt of $30,427 for 70,600 student loan borrowers in the state. North Dakota ranks fourth with an average of $30,542 per borrower, while Wyoming follows closely behind in fifth place, with $30,581.
The top 10 is rounded out by Wisconsin ($31,482), Nebraska ($31,551), Arkansas ($31,851), Indiana ($32,045), and Oklahoma ($32,102).
Forbes Advisor reported in May that Federal student loans make up the vast majority of American education debt—about 92% of all outstanding student loans is federal debt. The federal student loan portfolio currently totals more than $1.6 trillion, owed by about 43 million borrowers. The national average balance of federal student loan borrowers is $35,210.
3-year payment pause ending
Regardless of Friday’s Supreme Court decision on whether to strike down or uphold the Biden plan, federal student loan payments are set to resume in October after a more than 3-year pause that started back in March 2020.
The recent bill passed by Congress and signed into law by President Biden to raise the debt ceiling included a provision that forces the resumption of federal student loan payments later this year. The Department of Education recently posted on its website that “student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October.”
The Department of Education said borrowers will receive a billing statement or other notice at least 21 days before payment is due, and the notice will include the borrower’s payment amount.
SEE ALSO:
• Supreme Court Still Quiet on Student Loan Forgiveness Fate
• Debt Ceiling Deal: A Compromise for the U.S. Econony
• SoFi at Work Launches Student Loan Debt Repayment Service
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.