Earlier this summer, the Supreme Court’s decision to strike down President Biden’s plan for student loan forgiveness was an unpleasant surprise for over 40 million borrowers. As a result, these borrowers are now faced with the reality of having to resume their loan payments from October 2023 onwards. A recent study by WalletHub sheds light on which states will be most affected by this payment reality check, and which states will fare better. According to WalletHub, student loans account for the largest portion of household debt, trailing only mortgage debt, with a total of $1.64 trillion in outstanding balances as of the first quarter of 2023. However, this debt burden is not evenly distributed across the country.
WalletHub assessed all 50 states and Washington, DC on 12 different factors, which were grouped into two main categories: A) student loan burden and B) grants and work opportunities. The rankings were based on student debt, which accounted for 85% of the weighting, and grants and work opportunities, which accounted for the remaining 15%. To compile this data, WalletHub collected information from various reliable sources such as the U.S. Census Bureau, Bureau of Labor Statistics, The Pew Charitable Trusts, and Indeed. Surprisingly, there were no clear regional patterns in the state rankings, except for the overall better performance of states located to the west of Kansas.
The ten states that are likely to be hit the hardest by the resumption of student loan payments are spread across the eastern half of the United States. On the other hand, the bottom 10 states in the ranking are better positioned to handle the resumption of loan payments due to their lower debt burdens and the financial benefits provided for students.
If you find yourself in Pennsylvania, the ground-zero of student loan burdens, or if you’re lucky enough to be in Utah, or somewhere in between, it’s time to take action. Many things have changed since the loan pause started in 2020, including the transfer of 17 million borrower accounts to different loan servicers or platforms, as reported by the Consumer Financial Protection Bureau. This is an opportune moment to familiarize yourself with the details of your loans, reassess your budget, explore repayment options, and take other necessary steps to prepare for the financial impact ahead. Check out our comprehensive guide on the steps you can take to navigate the end of the payment pause.