Today, Americans owe over $1.5 trillion in student loans, and research shows that it is impacting the ways Americans save, spend and live their lives.
The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership. A study from NerdWallet predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in part because of the increasing burden of student debt.
Of course, a manageable amount of student debt can be worth it to get a college degree — in 2018, college graduates earned weekly wages that were 80 percent higher than those of high school graduates. But when students take on high levels of debt but do not experience significant earnings boosts needed to pay off their loans, the balance can become unwieldy.
It’s a situation that can be seen playing out in cities across the U.S. To determine which cities have the highest concentrations of overleveraged borrowers, WalletHub divided the median student-loan balance (based on TransUnion data from 2018) by the median earnings of bachelor’s degree holders over the age of 25 in 2,510 U.S. cities.
What they found is that that borrowers in select cities owe more than 80 cents for every dollar they earn. Here are the 10 cities where residents are most impacted by student debt, according to WalletHub:
10. Dacula, Georgia
Median student debt balance: $20,655
Median earnings of bachelor’s degree holders: $26,250
Ratio of student debt to median earnings of bachelor’s degree holders: 78.69%
9. Austell, Georgia
Median student debt balance: $25,146
Median earnings of bachelor’s degree holders: $31,935
Ratio of student debt to median earnings of bachelor’s degree holders: 78.74%
8. Murray, Kentucky
Median student debt balance: $21,555
Median earnings of bachelor’s degree holders: $27,356
Ratio of student debt to median earnings of bachelor’s degree holders: 78.79%
Elizabeth City, North Carolina
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7. Elizabeth City, North Carolina
Median student debt balance: $24,339
Median earnings of bachelor’s degree holders: $30,172
Ratio of student debt to median earnings of bachelor’s degree holders: 80.67%
6. Lady Lake, Florida
Median student debt balance: $27,290
Median earnings of bachelor’s degree holders: $33,675
Ratio of student debt to median earnings of bachelor’s degree holders: 81.04%
5. Waycross, Georgia
Median student debt balance: $17,994
Median earnings of bachelor’s degree holders: $22,158
Ratio of student debt to median earnings of bachelor’s degree holders: 81.21%
4. East Liverpool, Ohio
Median student debt balance: $18,466
Median earnings of bachelor’s degree holders: $22,222
Ratio of student debt to median earnings of bachelor’s degree holders: 83.1%
Palatka, Florida
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3. Palatka, Florida
Median student debt balance: $21,487
Median earnings of bachelor’s degree holders: $25,772
Ratio of student debt to median earnings of bachelor’s degree holders: 83.37%
2. Green Valley, Arizona
Median student debt balance: $20,464
Median earnings of bachelor’s degree holders: $24,250
Ratio of student debt to median earnings of bachelor’s degree holders: 84.39%
1. Sun City West, Arizona
Median student debt balance: $17,771
Median earnings of bachelor’s degree holders: $21,046
Ratio of student debt to median earnings of bachelor’s degree holders: 84.44%
Aerial view of Sun City, Arizona near Sun City West.
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According to WalletHub’s analysis, Sun City West, Arizona, is the city most overleveraged by student debt, with median student debt balances of roughly $17,771 and median earnings for college graduates of just $21,046, leading to a debt-to-earnings ratio of 84.44%. That means for every dollar earned by these college graduates, they owe more than 84 cents in student debt.
According to Data USA, the median household income for Sun City West residents is closer to $46,067, but that’s still significantly lower than the national median household income of $57,652.
To avoid being burdened by debt the way that residents in Sun City West are, Don Hossler, senior scholar at the Center for Enrollment Research, Policy and Practice, at the University of Southern California’s Rossier School of Education, suggests looking closely at projected earnings.
“Avoid borrowing more than the estimated starting salary of the job anticipated post-graduation. Beware of private loans,” he tells WalletHub. “Don’t use loan dollars like they are an ATM.”
“One of the most common mistakes I see students make when borrowing to finance their education is not fully understanding the terms of the loan, how much to expect in monthly payments after graduation, and who is lending them the money (federal government, private lender, or the school),” Brad Lindberg, Assistant Vice President for Enrollment and former Director of Student Financial Aid at Grinnell College tells WalletHub.
“To prevent making borrowing decisions they might come to regret, students need to educate themselves on the loan they are agreeing to pay back,” he says. “Students should not hesitate to reach out to their lender or the financial aid office to get the answers they need. Keeping in contact as the situation change is an important step to successful borrowing and repayment.”
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