Best and Worst Conditions for Student Loan Repayment Based on Disposable Income
Student loan payments can be a big burden depending on where you live and how much you earn. While there are several factors that affect your loan availability, Student Loan Hero has developed its own index to assess the best and worst states in the US for debtor students.
The student loan hero ( we told you about them earlier ) compared the average income in each state with the average cost of living, then calculated the percentage of disposable income, comparing it to typical payments on the average student debt balance of a 2014 graduate. in every state. They used data from the Bureau of Labor Statistics, the Council for Social and Economic Research’s Cost of Living Index, and the Institute for College Access and Success. They explain:
The key metric that Student Loan Hero tested to determine student loan availability was the percentage of a typical graduate’s monthly disposable income that would go towards student loan payments (assuming a standard 10-year maturity). To be considered affordable, the average student loan payment must be 10 percent or less of a graduate’s disposable income – similar to how the federal government restricts payments under most income-driven repayment plans .
However, none of the states or the District of Columbia passed this standard.
But the state with the most “affordable” debt has come close. In Utah, the student payout to disposable income ratio was 10.89%. Obviously, these numbers are based on overall averages, so individual results may vary. While these results won’t be accurate for every situation, they do provide some interesting insight into how student loans stack up with disposable income in these states, at least on average. At the national level, they found that student loan payments equal 17.3 percent of disposable income.
Here are the top five fortunes for loan repayments, as well as the ratio of student benefits to disposable income:
1. Utah : 10.89%
2. New Mexico : 12.22%
3. Wyoming : 13.31%
4. Washington : 13.33%
5. Colorado : 13.86%
And here are the five worst, according to Student Loan Hero’s:
1. Hawaii: 30.61%
2. New York : 25.83%
3. New Hampshire : 25.35%
4. Connecticut : 24.52%
5. Rhode Island : 22.64%
To see how these ratios differ in each state, check out the interactive graph below and then skip to their publication for the full methodology.
5 Best and Worst Conditions for Paying off Student Loan Debt | Student loan hero