Study: R.I. fifth worst for student loan affordability

RHODE ISLAND is the fifth-worst state for student loan affordability, according to Student Loan Hero. / COURTESY STUDENT LOAN HERO
RHODE ISLAND is the fifth-worst state for student loan affordability, according to Student Loan Hero. / COURTESY STUDENT LOAN HERO

PROVIDENCE – Rhode Island is one of the worst states for student loan affordability, according to a study released this week by Student Loan Hero, a website that helps users manage their student loans.
The study examined average debt upon graduation, cost of living and average annual wages for each state.
The study’s goal was to determine the percentage of a typical graduate’s monthly disposable income that would go toward student loan payments – 10 percent of disposable income was considered the benchmark for affordability.
Hawaii ranked as the worst state for student loan affordability, with borrowers allocating approximately 30 percent of disposable income toward payments. New York was next at 25.8 percent, with New Hampshire and Connecticut rounding out the top four at 25.4 percent and 24.5 percent, respectively.
Rhode Island borrowers allocate 22.6 percent of disposable income toward payments, putting the state at No. 5 on the list. In the Ocean State, the average student loan balance is $32,920, and the average annual wage is $50,780. The study said that average monthly student loan payments in Rhode Island are $333, noting the cost of living also is 15.6 percent higher than the national average.
“The combined higher student loan balances and living costs means Rhode Island residents will have a hard time keeping up with student loan payments. This is true even though the state’s typical wages … beat the national average by $2,460 annually (an extra $205 a month),” Student Loan Hero wrote.
New England dominated the top 10 of worst states for student loan affordability: Maine was sixth at 22.2 percent, Vermont was eighth at 20.4 percent and Massachusetts was ninth at 20.2 percent.
Nationally, student loan payments averaged 17.3 percent of disposable income. None of the states met the affordability standard of 10 percent; the state with the most affordable student loan payments – Utah – came closest at 10.9 percent of disposable income.
In Utah, the average student loan balance is $18,873, and the average annual wage is $44,130.

Disposable income of an average worker was calculated based on U.S. Bureau of Labor Statistics data on mean wages in each state. This disposable income was compared to typical payments on the average student debt balance of a 2014 graduate in each state based on a 10-year repayment plan, assuming a 4 percent interest rate.

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