Minnesota college grads among most debt-saddled anywhere, study finds
Using data from the Institute for College Access and Success, the Washington Post's Wonkblog put together an interactive state-by-state map looking at which states produce college graduates with the highest average debt load.
With regard to the class of 2012 -- the most recent class for which data is available (the numbers are made available just once every four years, the Post reports) -- Minnesota graduates ranked as the fourth-most indebted of any state, with an average of $31,497 in debt.
The only states "ahead" of Minnesota are Delaware ($33,649), New Hampshire ($32,698), and Pennsylvania ($31,675). (Check out the full map here.)
That's not good, but it's not all bad either, Minnesota Office of Higher Education financial aid and borrowing researcher Tricia Grimes tells us.
"It's been true for quite a few years that a higher percentage [of Minnesota grads] borrow, and they borrow somewhat more than the national average. Our office is somewhat concerned about that," Grimes says. "But Minnesotans have a track record of successfully repaying their student loans. Our default rates on federal loans have rated in the bottom third of states for many years, so that's an indicator that most are successfully repaying."
"We think what this means is that current students are likely to have friends and family who used loans in the past and have been successful in repaying them, so they're more likely to borrow," Grimes continues.
Grimes cites Minnesota's relatively high median income and low unemployment rate as reasons why college students here have "reasonable expectations they will get a job and repay their loans."
Minnesota could slide down the list in future years too, as last year Gov. Mark Dayton and the legislature approved a 15 percent increase in state grants while holding tuition flat at state schools for the 2014-15 biennium, Grimes says.
"If more of the students get grants perhaps they won't have to borrow as much," she adds.
Of course, none of that means there aren't lots of Minnesota graduates struggling with debt. Grimes says the Office of Higher Ed is working with the Department of Commerce on "financial literacy efforts to make sure people understand they should be minimizing their debt to the extent they can."
(For more, click to page two.)
"It's always advisable to take out federal loans before taking out state loans or private student loans, because federal loans have a bunch of flexible repayment options," Grimes says. "There's a number of options to help struggling borrowers, including economic hardship [exceptions], income-based repayment, and public service forgiveness."
But for struggling borrowers, most important thing is dealing with the problem directly rather than trying to run from it, Grimes says.
"The most expensive thing a borrower can do is ignore what their lender sends them about their student loans," Grimes says. "They think if they can't repay they just won't answer the phone, or email, or check the mail, but their lender is obliged to tell them about the options they have. Eventually those loans would get sent to a collection agency which adds about 20 percent in fees."
-- Follow Aaron Rupar on Twitter at @atrupar. Got a tip? Drop him a line at firstname.lastname@example.org.
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