Older Connecticut Residents Have Higher Student Loan Debt: Explore Connecticut Student Loan Debt
As of March 2022, over 45 million residents in the United States had outstanding principal and interest balances on their federal student loans, with an average balance of $35,685 per borrower. The Census Bureau reports 156 million residents who have at least some college education, meaning nearly 3 in 10 (29%) who attended or are attending higher education have outstanding student debt. This results in a total of over $1.6 trillion in outstanding debt, not including balances from private loans. Note that 9% of these borrowers were unable to be categorized into one of the fifty states (these categories included Puerto Rico, District of Columbia, Other, and Not Reported).
This post will explore and further dive into the student loan portfolio data published by the U.S. Department of Education.
Connecticut Students Are Slightly Less Likely To Have Loans And fewer Borrowers Are On income-Driven Repayment Plans
Only 27% of Connecticut students have outstanding student loans, compared to 29% nationally. States with the highest percentage of students who have student loans are Louisiana (35%), Mississippi (35%), and Georgia (35%), while the lowest rates are seen in Hawaii (17%), Wyoming (19%), and Alaska (20%).
When considering the average amount of student loans per borrower, Connecticut hovers around the national mean with an average loan amount of $35,931. The average loan amount is between $30,000 and $40,000 for all states with the exception of Maryland ($43,619), Georgia ($42,207), and North Dakota ($29,885).
Borrowers who have high loan payments relative to their income level may be eligible for an income-driven repayment (IDR) plan. There are four types of IDR plans as explained by the U.S. Department of Education, all of which are included in the data set used for our analysis. Nationally, 19% of borrowers are on IDR plans, with the highest rates in Oregon (24%), Idaho (24%), and Florida (23%). On the contrary, only 16% of borrowers in Connecticut are on IDR plans, with only New Jersey (16%) and Massachusetts (15%) having lower rates. While there are various factors that influence a borrower to enroll in an IDR plan, this analysis suggests that the ratio of loan payment to income may be lower in Connecticut than in most other states.
The Average Loan Amount of A Connecticut Borrower Increases With Age
About 3 in 4 borrowers in Connecticut have an outstanding debt of $40,000 or less, with the majority between $20,000 and $40,000.
When disaggregated by age, we observe that older borrowers tend to have higher outstanding loan amounts. While the average loan amount for a borrower 24 or under is less than $17,000, the average loan amount for a borrower 62 or older is over $53,000. This may be partially attributed to the high interest rates on federal student loans, which can ultimately force borrowers to make payments towards continuously accruing interest rather than their principal loan amount.
Student Loan Forgiveness And Moving Forward
In August 2022, the Biden-Harris administration announced a student debt relief program to aid borrowers who are struggling with their high-interest student loans. This program plans to forgive up to $20,000 in student loans for borrowers who qualify. The U.S. Department of Education estimates that nearly 90% of loan forgiveness will go to borrowers earning less than $75,000 a year.
In addition to the one-time relief announced by the Biden-Harris administration, some borrowers may be eligible for loan forgiveness through other programs. If you are interested, more information regarding student loan forgiveness can be accessed here and reports/data around forgiveness programs can be accessed here.
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