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California had more outstanding student loan debt than any other state as of Dec. 31, 2024, while Wyoming had the smallest balance. However, it’s important to remember that these figures don’t tell the full story. For instance, California’s high borrower population means its outstanding debt per capita is lower than some other states.
Key Takeaways
- The average student loan debt can vary significantly across different states, with the largest and smallest outstanding balances going to California and Wyoming, respectively.
- Despite both states having relatively small outstanding balances, the District of Columbia had the highest federal student debt per capita, whereas North Dakota had the lowest.
- Outside of borrower population, other factors that may cause student debt balances to vary between states include the condition of the local economy, an area’s demographic makeup, and the available education and career opportunities.
Overview of Federal Student Loan Debt
According to the United States Department of Education’s Office of Federal Student Aid (FSA), the total amount of outstanding student loan debt has surpassed $1.6 trillion, through March 2025. With 42.5 million borrowers, that averages out to approximately $39,075.29 per person.
In 2023, the amount of outstanding student loan debt had been steadily decreasing. As a result, the federal portfolio reached its lowest level in almost three years at the time, dropping just below $1.6 trillion. However, the outstanding balance spiked in March 2024 and (outside of a brief dip in the subsequent quarter) has been on the rise ever since.
What the general overview fails to capture is how regional differences affect each state’s student debt burden. At $151.5 billion, California had the largest outstanding student loan balance of any individual state, followed by Texas ($131.9 billion), Florida ($108.1 billion), and New York ($96.3 billion). Conversely, Wyoming’s $1.7 billion represents the smallest amount, with Alaska ($2.4 billion), North Dakota ($2.6 billion), and Vermont ($2.9 billion) not far behind it.
What these states all have in common is that they also have either the highest or lowest number of borrowers in the U.S. However, on a per capita basis, the District of Columbia had the highest student loan balance at $54,561. Meanwhile, North Dakota had the lowest one, at $29,115.30. This shows that while a state’s total outstanding debt balance generally correlates with its borrower population, the overall figure doesn’t paint a sufficiently clear picture of what that burden actually looks like for its residents.
Fast Fact
The locations of roughly 2.2 million borrowers, who represent $56 billion in outstanding student debt (or $25,439.51 per person), weren’t required to be reported to the Education Department by commercial lenders. Another 95 thousand, responsible for $4.6 billion ($48,421.05 per person), reside outside of the U.S. states and territories listed in FSA’s report (which includes the District of Columbia and Puerto Rico).
Overview of Private Student Loan Debt
The distribution of private student loan debt by state is a bit harder to accurately quantify. According to one estimate from the Student Borrower Protection Center, a nonprofit advocacy group for student loan borrowers, the states with the highest outstanding student loan balances in 2022 were California ($11.93 billion), Texas ($10.34 billion), Florida ($8.48 billion), and New York ($7.58 billion). Similarly, the states with the least student loan debt were Wyoming ($136.59 million), Alaska ($192.83 million), North Dakota ($208.90 million), and Vermont ($233 million).
Fast Fact
As with the federal student loan data, the Student Borrower Protection Center’s estimates includes borrowers who either weren’t reported to the Education Department or reside outside of the U.S. These groups were responsible for $4.76 billion and $361.55 million, respectively, in outstanding student loans.
Potential Factors Influencing State-by-State Variations
As the prior data shows, part of the reason some states have higher student debt balances is simply due to borrower population size. After all, the more people live in a given area, the greater the likely concentration of people who’ve taken out student loans.
However, the per capita data shows that the number of borrowers in a given state can’t be the sole factor in play. Below are a few other elements that might influence a state’s outstanding student debt balance:
- Local economic conditions: Certain states have higher costs of living than others, which means paying more for necessary expenses (e.g., food, housing, etc.), so unemployed students may need to take on additional debt to cover those costs. Similarly, higher overall costs may mean colleges charge more to cover their operating costs, pay their workforce, and fund the services they provide. For example, according to a 2017–18 study from the Urban Institute, on-campus housing was generally more expensive in high-cost areas (e.g., New York, California, etc.).
- Demographic characteristics: States also can have substantially different demographic makeups. For instance, according to a 2019 report from the Federal Reserve Bank of New York, borrowing rates were 23% higher in communities with a majority of Black residents, compared to 17% for Hispanic-majority areas and 14% White-majority ones. Additionally, balances varied similarly during this same period, with the average in Black-majority areas being over $37,000. As such, some of the variance between state student debt burdens may be a result of certain places having a greater concentration of a particular demographic group.
- Education and workplace makeup: In addition to the number of people living in a state, the amount of schools and job opportunities also need to be taken into account. For instance, states with a greater concentration of higher education institutions may have a larger number of indebted borrowers (although not everyone will live where they went to school). Another example: the average medical school debt was more than $240,000 in 2022. States with more hospitals will require quite a few medical school graduates to staff them, so the debt burdens of those states will likely be higher.
The Bottom Line
States with higher borrower populations tend to have the largest outstanding student loan balances. As such, student loan debt varying between states is unavoidable and no cause for concern by itself. However, higher debt burdens may also be the result of rising living costs in certain states or existing socioeconomic inequality. These issues must be addressed if higher education is to remain accessible for future students.
