Student loan debt connected to overall economic pressures

Many Minnesotans have personally felt the squeeze from student loans. For many, there is graduation and the sudden realization that tens of thousands of dollars is owed for that education. Prior to taking out these loans, many did not worry, believing they would just find a great-paying job right out of college. However, after graduation -- for many -- the realization of the current economy and how much entry level positions actually pay starts to set in.

Graduates all over the country can also relate. In fact, student loan debt has now surpassed credit card debt. This is such an issue, not only from a having debt perspective, but because of the connection between student loan debt and larger economic issues, such as a slow housing recovery and a general lack of spending.

The New York Federal Reserve recently released a report breaking down states by the average student loan debt and the average percentage of delinquency on those student loans. From this, clear trends were seen in regions of the country.

Going by this chart, Minnesota is actually one of the states doing rather well. The average student debt is among the lowest -- roughly $24,000 per student -- and the delinquency rate is among the lowest at 9 percent. In some other areas of the country, not only is the average amount of debt significantly higher, but the average percentage of delinquencies more than 90 days is also higher.

In general, the trend in Minnesota is to borrow little and pay it back. Part of the reason this is even possible is due to the unemployment rate, which is lower in Minnesota than other parts of the country.

However, this is not to say that people are not still struggling in Minnesota. Rather, it is just that on average there is not as much debt or delinquency. But, the debt is still there, it is just not as high. And, there are plenty falling behind on payments, it is just not as many as in other states.

The affects of student loan debt also varies from person to person. Basically, what is affordable depends on how much a person makes and what their other debts are like. For many people in Minnesota, the debt is just too much and bankruptcy becomes their best debt relief solution.

Source: CNBC, "How Mapping Student Debt Changes the Debate," Paul O'Donnell, May 15, 2013

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