The Best States To Pay Off Student Loan Debt

For the 43.4 million Americans carrying federal student loan debt, the return of student loan repayments in October may have added another line item to already strained budgets. However, in some states with higher incomes and lower costs of living, residents are in a better position to afford debt payments and loan payoffs.

In a new study, Forbes Advisor analyzed publicly available data to identify the best and worst states to pay off student loans. We looked at five weighted factors to calculate a student loan repayment affordability score for each state:

• Estimated monthly student loan repayment as a percentage of average disposable income (40% of score)
• Student loan borrower delinquency rates (20%)
• Cost of living (20%)
• Salary growth (10%)
• Unemployment rates (10%)

Top 10 States To Pay Off Student Loan Debt

1. Massachusetts

Score: 100 out of 100

• Student loan repayments in Massachusetts represent a relatively low percentage of disposable income compared to other states. More specifically, the Bay State’s average monthly loan repayment of $204.28 constitutes 9.2% of their average monthly disposable income of $2,220.56, ranking second-lowest in this metric.
• Massachusetts ranked ninth-highest for the five-year change in average salary (23.3%), resulting in an average annual salary of $76,600 in 2022.
• Additionally, Massachusetts tied with New York for the third-lowest student loan borrower delinquency rate of 4.9%. It also tied for 10th place with Virginia and Montana for the lowest unemployment rate, which stood at 2.5%.
• One downside, however, is Massachusetts’ high cost of living. The state has the second-highest cost of living nationwide, but high incomes help to keep student loan payments more affordable.

2. North Dakota

Score: 99.30 out of 100

• North Dakota ranks fifth-lowest in the student loan repayment-to-disposable income ratio. The average resident will owe $174.72 in monthly repayments, accounting for 9.66% of their overall monthly disposable income, averaging $1,808.75.
• The Peace Garden State tied with Vermont for the sixth-lowest student loan borrower delinquency rate at 5%. It also tied with Nebraska for the fifth-lowest unemployment rate, which came in at 2%.
• North Dakota sits in the middle for the cost of living index. The state ranks 25th-lowest in that metric, with the cost of living measuring 4% below the national average.

3. Nebraska

Score: 94.43 out of 100

• Nebraska tied with New Hampshire for the lowest student loan borrower delinquency rate of 4.8%.
• Nebraska ranked 11th-best in the cost of living index, with living expenses costing roughly 8.7% below the national average.
• Nebraska ranked in the better half of the list for the student loan repayment-to-disposable income ratio. The average monthly student loan repayment of $193.32 accounts for 11.8% of the average monthly disposable income ($1,637.81).

4. Washington

Score: 90.94 out of 100

• Student loan borrowers in Washington will be pleased to know that the state has the lowest student loan repayment-to-disposable income ratio. The average monthly student loan repayment of $197.41 accounts for only 8.69% of the average monthly disposable income ($2,272.33).
• Washington ranked 16th-lowest for student loan borrowing delinquency, with a rate of 6.3%.
• While Washington ranks ninth-highest in cost of living, with living costs measuring roughly 11.5% higher than the national average, its residents experienced the second-highest salary growth rate nationwide. Over the last five years, average wages increased by 25.87%, resulting in an average salary of $73,350 in 2022.

5. Rhode Island

Score: 89.90 out of 100

• Rhode Islanders' student loan repayments of $188.89 accounted for 9.31% of their monthly disposable income ($2,029.86), ranking them as the third-best state in the student loan repayment-to-disposable income ratio.
• Rhode Island ranked 13th-highest when it came to cost of living, with expenses surpassing the national average by 11.8%. Rhode Island has witnessed a significant salary growth rate of 21.5% between 2017 and 2022. This has led to an average salary of $64,540, providing residents with a more favorable situation for managing and repaying their student loans.
• Rhode Island ranked 14th-lowest for borrower delinquency rate (6.1%) and 20th-lowest for unemployment rate (2.8%).

6. Wisconsin

Score: 89.20 out of 100

• Wisconsin ranked 13th-lowest among states for the student loan repayment-to-disposable income ratio. Wisconsinites pay an average of $189.15 in student loan repayments, which accounts for 10.92% of their total monthly disposable income ($1,731.92).
• Wisconsin also ranked 13th-lowest for student loan borrower delinquency, with a rate of 6%, and it tied with Arkansas for the 14th-lowest unemployment rate, at 2.6%.
• Additionally, Wisconsin ranked 22nd-lowest in cost of living, with living expenses roughly 4.9% below the national average.

7. Minnesota

Score: 88.85 out of 100

• Minnesota residents can expect to pay an average of $207 monthly toward their student loans, accounting for 10.17% of their monthly disposable income. That’s the 11th-lowest student loan repayment-to-disposable income ratio across all 50 states.
• Minnesota ranked 23rd-lowest in cost of living, with the average resident paying roughly 4.4% below the national average.
• Additionally, Minnesota ranked 20th for salary growth. Wages grew 20.69% over the last five years, resulting in an average salary of $63,640 in 2022.

8. New York

Score: 88.15 out of 100

• New Yorkers will be happy to hear that their average monthly student loan repayment of $218.12 accounts for only 9.59% of their monthly disposable income, ranking them fourth-lowest in the student loan repayment-to-disposable income ratio.
• While New York holds the fourth-highest position on the cost of living index, with expenses exceeding the national average by approximately 26.6%, the state secured the fifth-highest rank in terms of salary increase. Between 2017 and 2022, wages grew by an impressive 24.58%. Consequently, the average salary in 2022 reached $74,850, offering a more favorable environment for repaying student loans.
• New York student loan debt holders have the third-lowest borrower delinquency rate, tying with Massachusetts at 4.9%.

9. New Jersey

Score: 86.41 out of 100

• New Jersey residents' average student loan repayment of $213.75 accounted for 9.81% of their total monthly disposable income ($2,179.11). This makes them the seventh-lowest state for the student loan repayment-to-disposable income ratio.
• Despite ranking 13th-highest on the cost of living index, with expenses exceeding the national average by approximately 11.8%, New Jersey secured the sixth-highest position in terms of salary increase over the past five years. Wages grew an impressive 24.43%, and as a result, the average salary in 2022 reached $70,890, providing residents with a more favorable opportunity to ease the repayment of their student loans.
• Additionally, New Jersey ranked 10th-lowest for its student loan borrower delinquency rate (at 5.8%).

10. New Hampshire

Score: 84.67 out of 100

• New Hampshire tied with Nebraska for the lowest student loan borrower delinquency rate of 4.8%.
• New Hampshire ranked 10th-highest in cost of living, with living expenses measuring roughly 14.6% above the national average.
• The Granite State also ranked 14th-highest for the average salary increase, with a 22.55% rise between 2017 and 2022. This increase resulted in an average salary of $62,550, showcasing a strong opportunity for salary growth to mitigate higher costs.

Top 10 Worst States To Pay Off Student Loan Debt

1. Hawaii

Score: 0 out of 100

• Hawaii had the worst repayment-to-disposable income ratio, with residents allocating a massive 26.58% of their monthly disposable income ($739.78) toward their estimated average monthly student loan payment of $196.61.
• The Aloha State had the highest cost of living by far, but the average salary ($61,420) was similar to or even less than average salaries for other lower-cost states. The five-year salary growth in Hawaii was also lower than average (18%), and residents faced with budget-busting housing, food and transportation costs could struggle to pay off debt when salaries don’t keep up with the cost of living.

2. Nevada

Score: 10.45 out of 100

• Nevada ranked seventh highest for the student loan repayment-to-disposable income ratio, with the average resident allocating 15.23% of their monthly disposable income ($1,206.92) to cover their estimated average monthly loan payment of $183.78.
• Nevada had a drastically lower cost of living than Hawaii, ranking 22nd on the highest cost of living scale. Still, its high unemployment rate (5.3%) and high loan delinquency rate (9.8%) contributed to its second-place position on our worst list.

3. South Carolina

Score: 13.24 out of 100

• South Carolinians have the fifth-highest student loan repayment-to-disposable income ratio, with 17.15% of residents' monthly disposable income ($1,294.92) going toward their average student loan payment of $222.04.
• South Carolina ranked in the middle of the pack as far as the cost of living goes. However, residents have a low amount of disposable income to apply for loan payments, and the state’s student loan delinquency rate is one of the highest at 9.1%.

4. West Virginia

Score: 16.38 out of 100

• Ranking fourth-highest for the student loan repayment-to-disposable income ratio, the average West Virginian allocates 17.65% of their monthly disposable income ($1,149.67) to their estimated average student loan payment of $202.87.
• West Virginia had the sixth-lowest cost of living nationwide. Still, the state had the third-lowest average income ($49,170) across states and the highest loan delinquency rate overall (11%), indicating that some residents have trouble making ends meet.

5. Mississippi

Score: 17.77 out of 100

• Unfortunately for Mississippians, the state ranks second-highest for the student loan repayment-to-disposable income ratio, with residents allocating an average of 18.30% of their disposable income ($1,068.58) toward an estimated student loan payment of $195.54.
• Mississippi had the lowest cost of living nationwide but also the lowest average income ($45,180) and low salary growth. Its high borrower delinquency rate (10%) is another factor that contributes to its fifth-place ranking.

6. Oregon

Score: 18.82 out of 100

• The state ranked 11th worst for the student loan repayment-to-disposable income ratio, with the average resident allocating an average of 14.64% of their monthly income ($1,556.36) to cover their estimated average loan repayment of $227.87.
• Oregon had the 14th-highest average salary ($62,680), but it also had the seventh-highest cost of living and the 16th-highest loan delinquency rate (8.3%). This is an example of how high living expenses can eat away at a high salary, which could leave less room for debt repayment.

7. Kentucky

Score: 21.25 out of 100

• Based on our analysis, Kentuckians allocate an average of 14.39% of their disposable income ($1,405.44) toward their estimated student loan repayment ($202.27). This is the 13th-highest rate for the metric across states.
• The Bluegrass State clocked in with the third-highest loan delinquency rate among states (10%) and eighth-highest unemployment rate (3.8%), landing it in seventh place on the worst state list.

8. Florida

Score: 28.22 out of 100

• This state ranked third highest for the student loan repayment-to-disposable income ratio. Based on our analysis, residents allocate an average of 18.05% of their monthly disposable income ($1,183.50) toward an estimated student loan repayment of $213.67.
• Florida ranked fourth-highest for salary growth (25%) over the past five years, but the low average disposable income and a statewide loan delinquency rate of 8.2% contributed to its eighth-place ranking on the worst list.

9. Louisiana

Score: 29.27 out of 100

• Louisianians with student loan debt allocate an average of 14.91% of their monthly disposable income ($1,309.89) toward an estimated monthly repayment amount of $195.26.
• Besides having the ninth-worst disposable income rate nationwide, Louisiana had the ninth-highest loan delinquency rate (9.3%) and fifth-lowest average income ($41,590) across states.

10. Delaware

Score: 31.36 out of 100

• The state ranked 18th worst for the student loan repayment-to-disposable income ratio. On average, residents spend 13.60% of their disposable income ($1,603.31) to cover their estimated monthly loan repayment of $218.
• Delaware tied with Texas for the third-highest unemployment rate of 4.1%, and its five-year salary growth rate is lower than the national average, earning it a place in the top 10 worst states for paying off student loan debt.

Tips for Successfully Paying Off Student Loans

Paying off debt may feel like an uphill battle, especially when receiving loan statements that show five- and six-figure balances. Fortunately, repayment plans and strategies can make paying down debt less burdensome. Below are tips to pay down student loans.

1. Budget for Monthly Payments

Tracking income and expenses is the best way to locate money for repaying debt. Finding ways to cut spending and increase income can free up cash for minimum payments and extra principal-only payments, which can help chip away at balances faster. Federal student loans don’t have prepayment penalty fees, so you don’t have to worry about being penalized for paying off debt early.

2. Consider Debt Consolidation

Borrowers struggling to keep track of multiple federal loans can apply for a direct consolidation loan to combine many loans into one, making it easier to manage. Besides convenience, student loan consolidation offers several other perks.

Consolidation loans have a fixed interest rate, which is the weighted rate of loans consolidated. Plus, consolidating loans that don’t qualify for Public Service Loan Forgiveness (PSLF) could make them eligible for the program.

One drawback is that discounts, rebates or cancellation benefits on old loans may disappear after you consolidate, so be sure to double-check which perks you might lose before consolidating.

3. Compare Refinancing Options

Refinancing student loans can adjust loan terms and loan interest rates, which can lower monthly payments, provide interest savings and expedite debt payoff. Ideal candidates for student loan refinancing are borrowers with stable incomes and strong credit. That’s because the best student loan refinance rates are usually given to the most creditworthy applicants.

The best student loan refinance lenders clearly outline terms, interest rates and fees on loans to help borrowers shop around. Remember that refinancing federal loans with a private lender strips them of valuable features, like forgiveness opportunities and income-driven repayment (IDR) plans. Similar to debt consolidation, make sure to weigh the pros against the cons of keeping your existing loans when deciding if you should refinance student loans.

4. Consider Student Loan Debt Forgiveness

If you’re a teacher or work in public service, federal and state loan forgiveness programs may provide a shortcut to debt payoff. Teachers Loan Forgiveness is a nationwide program that forgives up to $17,500 in eligible federal loans. The PSLF program forgives federal loan balances after borrowers working in public service make 120 qualifying student loan payments.

State forgiveness and assistance programs may also help eligible workers manage federal and private loans. These programs vary by state. California, Delaware, Georgia and Minnesota are examples of states that pay off student loans or cancel debt for professionals in medical, social work, law enforcement and teaching fields.

What if your career path doesn’t doesn’t qualify for forgiveness? Exploring employer-provided student loan repayment assistance could be an alternative. Some employers, like Abbott and Chegg, offer debt repayment programs as an employee benefit. And if companies don’t have a debt repayment plan in place, this is a benefit employees and job seekers could try negotiating.

5. Choose Repayment Options Carefully

The best repayment option varies based on your goals and financial situation. The default repayment term for federal loans is the 10-year standard repayment plan, and staying on it is likely the best option for borrowers who want to get rid of debt quickly and save on interest.

If payments are too high under the 10-year plan, getting on an IDR plan can lower them. However, IDRs will also extend the loan term, causing debt to linger and interest to accumulate. StudentAid.gov has a loan simulator you can use to simulate repayment plans to choose the most cost-effective and budget-friendly repayment strategy.

6. Sign Up for Autopay

Using autopay is a way to ensure payments are always made on time, which can help you build credit history. Some private lenders even offer interest rate discounts for using autopay, and every bit of potential interest savings counts when paying down debt.

Methodology

To determine which states are best to pay off their student loan debt, Forbes Advisor compared all 50 states across the following five metrics:

• Estimated monthly student loan repayment as a percentage of disposable income (40% of score).
  • We utilized the most recent data (Q4 2021) from the Federal Reserve Bank of New York on median loan balances by state and the Forbes Advisor Student Loan Calculator to determine monthly student loan repayments. We assumed an average interest rate of 6% (based on data from the Education Data Initiative) and 10-year loan term.
  • Disposable income was calculated by subtracting the average cost of rent, health care, income taxes, food and transportation from the average salary in each state.
  • Data for median gross rent comes from the Census Bureau’s 2022 1-year American Community Survey. Data for average cost of healthcare, income taxes, food and transportation comes from the MIT Living Wage Project for 2022. Data for average salary comes from the Bureau of Labor Statistics (BLS) for May 2022.
• Student loan borrower delinquency rate (20% of score). The borrower delinquency rate is the share of borrowers who have at least one student loan 90-plus days delinquent or in default. Data for this metric comes from the Federal Reserve Bank of New York and is for Q4 2021.
• Cost of living index (20% of score). The index score reflects a state’s cost of living relative to the national average. A score below 100 reflects a cost of living that is below the national average, while a score above 100 means the cost of living is higher than the national average. Data for this metric comes from the Missouri Economic Research and Information Center (MERIC) and is for Q2 2023.
• Five-year change in average salary (10% of score). Data for this metric comes from BLS data and reflects the change between 2017 and 2023.
• Unemployment rate (10% of score). Data for this metric comes from BLS July 2023.