by Ross Williams, Georgia Recorder [This article first appeared in the Georgia Recorder, republished with permission]

December 22, 2023

The holidays aren’t cheap, and neither is a college degree. And for the first time since the pandemic, more than 1 million Georgians might need to factor in the cost of student loan payments into their budgets as they prepare to celebrate.

Loan payments, paused during the COVID-19 pandemic, kicked back in this October, creating a new monthly expense for more than 15% of Georgians.

Georgia ranks No. 3 in the nation for student loan debt after the District of Columbia and Maryland, with the average borrower more than $41,000 in the red for their diploma, according to the Education Data Initiative.

In all, 1.6 million Georgians owe $68.6 billion in student loans, and just over half of them are 35 or older.

An October Pew study found that the resumption of payments could affect states differently. People in states where the total outstanding federal loan balance makes up more than 10% of total personal income can be at particular risk, and in Georgia, federal student loans make up 13.3% of state personal income, according to Pew.

“State personal income is kind of a tricky measure, but basically it sums up all of the money that residents receive from work, investments, business, from owning business and property, and kind of benefits from employers or the government,” said Melissa Maynard, project director of the Fiscal 50 project at The Pew Charitable Trusts.

That measure matters for state governments, said Maynard, because it helps them think about their revenue forecast.

“And if there are changes to their residents’ income, that can signal future changes to either the tax revenue or the spending side of the budget ledger,” she said. “So just to put it another way, by looking at outstanding student loan balances as a portion of state personal income, we can kind of see how the overall loan burden per state compares to the amount of individual resources circulating within the state.”

Student debt reduces household spending and business growth, according to the Education Data Initiative.

Each time a consumer’s student debt-to-income ratio increases by 1%, their consumption declines by 3.7%, the initiative finds, and people with debt loads greater than $30,000 are 11% less likely to start a business.

The data tracks how much borrowers owe, but not where they came from, so it may be that the state’s high amount of debt reflects its population and demographic growth, said Spencer Orenstein, an officer with the student loan initiative at The Pew Charitable Trusts.

“Georgia is a state that has had a lot of population growth, with Atlanta being a highly growing area with a lot of jobs attracting folks with college educations to that area,” he said. “So just to point out that some of this population could be folks who maybe got their degree out of state and moved to Georgia for job opportunities.”

Another potential factor for Georgia’s higher than average debt rate is markedly less inspiring.

“We do know that certain populations tend to have higher student loan debt. This often includes borrowers of color,” Orenstein added. “And with Georgia and the south having larger populations of color, that is probably one reason that would explain having a higher student loan amount than some other states.”

According to the Education Data Initiative, Black college graduates nationwide owe an average of $25,000 more than white grads. With average monthly payments of $250, higher than any other racial group, Black borrowers were the most likely to tell pollsters they were putting off buying a home or were working extra hours because of their debt.

Orenstein said there is some encouraging news in Georgia’s student loan data: about one in five Georgians are enrolled in income-based repayment plans, which he said can significantly lower monthly payments.

“Georgia is also one of the highest states when it comes to borrowers enrolled in income-driven repayment plans, and I think this is really important because I think this is something that is likely to mitigate the potential impact both on statewide finances, but most directly on people’s household budgets, because income-driven repayment plans make student loan payments a lot more affordable by linking a borrower’s monthly payment to their income.”

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