CINCINNATI -- While college students from across the region shop for books and supplies before the start of the new school year, graduates are feeling a financial strain of their own.
A recent study from WalletHub ranks Ohio as the 10th-worst state in the country for student debt, meaning it’s one of the least friendly states in the country toward student debtors.
WalletHub, a website that offers free credit scores and full credit reports, compared the 50 states and the District of Columbia across nine key metrics, including student debt as a percentage of income, average student debt per borrower, the student default rate, the unemployment rate for recent graduates, the availability of both student jobs and paid internships, and the number of government grants at the state and local levels, said WalletHub analyst Jill Gonzalez.
“If a state is bad at student debt, it means that typically there is a higher average student debt rate than normal, that more students have that debt, and it’s a higher percentage of their annual income, and often the default rate is high,” she said. “They can’t keep up with their student loan bills. It also could mean the unemployment rate for student jobs is high, or government grant money has decreased significantly within the past year, or opportunities for internships or paid co-ops is low.”
For Ohio, Gonzalez said, student indebtedness was especially high, meaning there are many more students who have student loan debt – roughly 67 percent of students -- than there are in other states. For states at the top of the list, the rate is less than half of students.
There also is a high student default rate in Ohio, Gonzalez said -- it sits about 12.5 percent, whereas states at the top of the list have rates in the single digits.
Finally, she said, there is a higher-than-average percentage of student loan borrowers over the age of 50 in Ohio, at just more than 8 percent. States near the top of the list are around 4 or 5 percent.
That category doesn’t just include nontraditional students, but also people who still are paying their student loans, are choosing to go back to school at a later age and are graduate or Ph.D. students, Gonzalez said.
One positive thing about Ohio that the study found, Gonzalez said, is that it has seen an increase in the number of state and local government grants available to undergraduate students. The number increased about 5 percent from 2015 to 2016.
“That’s moving in the right direction,” she said. “It’s making more government grants available to students so they don’t have to lean as heavily on student loans.”
Also important to remember, Gonzalez said, is that the study didn’t strictly measure Ohio students. It’s also inclusive of people who went to school in other states and now live in Ohio.
One way Ohio can raise its ranking, said Brendon McQueen, CEO and co-founder of Tuition.io -- a platform for the organization and optimization of student loans -- is by enabling employers to contribute to their employees’ loans, something Tuition.io introduced last year through the launch of an enterprise platform.
Since the beginning of 2016, he said, 10 to 20 percent of Fortune 500 companies around the country, including several large employers in Ohio, began looking at student loan repayment as a way to attract top talent.
“I think that that is a great thing,” McQueen said. He added that he believes it will help raise the state’s ranking in terms of friendliness toward student debt.
Another way McQueen advises states like Ohio to raise their ranking is by investing in their community colleges, which, he said, are too often undersold.
“Community colleges are a great option for people who are 18 and may not know what they want to do with their career yet and don’t want to incur crazy debt figuring it out,” he said. “It’s also great because you can transfer those credits that are cheaper to a more expensive school eventually. States need to invest in their community colleges and try to increase not only the ROI of the education there, but also their ability to attract people.”
McQueen also encourages families to be more cognizant about how much higher education costs: “There are a lot of other things involved in the cost of higher education that people need to think about, such as housing and food. Those aren’t usually included on the bill. Oftentimes, you’ll have to take out extra student loans just to cover those kinds of unknown expenses.”
The bottom line, McQueen said, is that the student loan crisis in America isn’t going away. In fact, he said, it’s expected to double in the next 10 years.
“I think the only way to address the crisis is to get into the weeds,” he said. “Unless you take a closer look at the issue, I think a lot of people turn their backs on it because it’s such a huge problem. The insights from this WalletHub study paint a more granular picture and, in some ways, make it more real.”