Student loan debt by state: what explains the disparities?

Young Americans are drowning in debt, and student loans are a major culprit. But this problem isn’t spread evenly throughout the country: residents of Maryland, the state with the highest average student debt burden per borrower, owe 43.72% more than residents of North Dakota, the state with the lowest.

Based on data from the Office of Federal Student Aid, we have mapped out the states with the highest and lowest average student debt loads per borrower.

To put this data in context, we also indicate each state’s average bachelor’s-level earnings, the average net cost of college, and educational attainment.

While many more factors contribute to high indebtedness, one thing is clear – in some states, a college education is not paying off quickly enough.

High-level findings

Debt

• Maryland has the highest student debt per borrower, at an average of $43,116.
• Georgia is second, with an average debt of $41,775 per borrower, while Virginia is third, with an average debt of $39,599 per borrower.
• North Dakota has the lowest average debt per borrower, at an average of $30,000.
• The states where the highest percentage of bachelor’s holders have student debt are Mississippi, Louisiana, and West Virginia.
• Conversely, Hawaii, Utah, and Washington have the lowest percentage of bachelor’s holders with student debt.
• The states with the largest total student debt burdens are, unsurprisingly, the most populated states: California, Texas, Florida, and New York. California has the most student loan debt in total, at $149 billion.

Cost of college and future earnings

• The states where education is the most expensive on average are New Hampshire, Rhode Island, and Massachusetts.
• Meanwhile, residents of Wyoming, Alaska, and New Mexico pay the least on average for their education.
• Real earnings for bachelor’s holders are highest in Massachusetts, Connecticut, Utah, and North Dakota.
• Bachelor’s-level real earnings are lowest in New Mexico, Arizona, Hawaii, and Alaska.

» Read: States whose colleges have the highest-paid grads

Educational attainment

• Maryland, the state with the highest average student debt, is also the 4th most educated state by percentage of the population with a bachelor’s education or higher, behind Massachusetts, Colorado, Vermont, and New Jersey.
• The least educated states are West Virginia, Mississippi, Arkansas, Louisiana, and Kentucky.

Average student debt by state

Below is a list of states by student debt per borrower, from highest to lowest. We have included the state’s total student debt burden, in billions of dollars, and the number of borrowers in that state. Data comes from the Office of Federal Student Aid.

Source: Office of Federal Student Aid

Average cost of college by state

It’s tempting to assume that a major cause of high student loan burdens would be expensive tuition or low salaries.

To check if this is true, we looked at data on future earnings and college costs from IPEDS and College Scorecard.

The earnings column represents average salaries 10 years after graduation, adjusted to reflect cost of living. Meanwhile, the cost data does not refer to tuition, but rather to the net cost of college – which is the average amount students pay after financial aid. Only students who received some financial aid were included (85% of students did).

Interestingly, the correlation between both cost and earnings and average indebtedness is somewhat weak.

This can partially be explained by the fact that cost and earnings data is from 2022, whereas indebtedness represents a snapshot in time of a long-term process. Individuals with student debt graduated from university in different years and emerged on the job market into very different economies, when college costs were also different. People move to new states after graduating, and college used to be a lot cheaper.

» Also read: The most expensive colleges in America

Source: IPEDS
*Correction: due to a data extraction issue, average cost of college figures were wrong between 21 November and 5 December 2023. The error has been fixed.

States by education level

Another potential assumption is that states with high average educational attainment may have higher student debt per borrower.

While student debt data does not factor in individuals with no student debt, some link could be expected: states with a high level of educational attainment may have a strong, highly skilled job market with more opportunities for well-paying jobs. This could lead students to be willing to take on higher levels of debt with the expectation that they will be able to earn more after graduation, making it easier to repay their loans.

» Also read: Should you go to a public university?

However, the correlation between high student debt and statewide educational attainment is also somewhat weak. While Maryland, the state with the most student loans per borrower, is also the 4th most educated state, other highly educated states like Massachusetts have relatively low student debt burdens.

Below, we reveal the average educational attainment by state. The list is from the US Census Bureau’s 2021 data for people aged 25 and older.

The most educated state is Massachusetts, while the 2nd and 3rd most educated states are Vermont and Colorado.

We also show the percentage of people with a bachelor’s degree or above who currently have student debt. This data isn’t completely representative of a state’s higher ed landscape, as people may have moved from other states.

Nevertheless, it reveals interesting insights: college-educated residents of Southern and Midwestern states seem to have the highest student debt rates, whereas Northeastern and Western states have the lowest.

Source: US Census Bureau

Final thoughts

America’s student debt crisis has complex roots that require comprehensive solutions. Fixes need to provide relief for lenders with unmanageable student debt while also addressing the root causes of indebtedness.

But what can you, as a student, do now? If you want a college education but you’re uneasy about student loans, we encourage you to think of college as an investment. Some degrees pay off better than others.

To help you make a smart decision, we rank degrees by their value for money. For example, check out our rankings of the best national universities, the best colleges in Maryland, or the best nursing programs. By looking at your college education like an investor would, you can avoid excessive debt and set yourself up for economic freedom after graduation.