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How Much State Debt Rests on Your Shoulders?

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The following “snowball” shows state debt per person in each state:
How Much State Debt Rests on Your Shoulders?

How Much State Debt Rests on Your Shoulders?

We’ve previously shown the federal government debt incurred per person in each country, but today’s infographic drills down to the state level.

How much state debt is there per person, and why is there such a wide discrepancy between states like Massachusetts ($11,000 per person) and Nebraska ($1,000 per person)?

The Snowball of State Debt

Today’s infographic from HowMuch.net, a cost information site, organizes states by debt per capita using a snowball-like effect.

The five states at the center of the snowball with the highest debt per capita are Massachusetts ($11,000), Connecticut ($9,200), Rhode Island ($8,900), Alaska ($8,200), and New Jersey ($7,400).

On the other end of the spectrum are the five states with the lowest state debt per capita: Tennessee ($900), Nebraska ($1,000), Nevada ($1,200), Georgia ($1,300), and Arkansas ($1,500).

While it is reasonable to expect big differences in debt per capita between countries, seeing an interstate difference of up to 10x per person seems a bit perplexing at face value. Let’s see if we can dig a little deeper on what accounts for these differences.

The Curious Case of Massachusetts

Currently, Massachusetts holds the title of the highest state debt per capita, as well as ranking #2 in terms of state debt as a percentage of GDP (14.0%). It’s also worth noting that debt analysts at S&P have recently lowered the outlook on state bonds from stable to negative.

Meanwhile, The Mercatus Center ranked Massachusetts in 49th place in their 2016 State Fiscal Rankings. (The only state to fare worse was Connecticut.)

Mercatus snapshot for Massachusetts

Like other old and urban states, Massachusetts requires significant investments to repair aging roads, schools, and other infrastructure. For many fiscal analysts, however, it is the gap in unfunded liabilities that is the long-term concern.

Forbes notes that unfunded liabilities from public pensions are probably the biggest fiscal problem facing state governments today, and Massachusetts is no exception. Unfunded liabilities in the state are pegged at $94.45 billion with other postemployment benefits (OPEB) at $15.38 billion, and eventually these are issues that will have to be dealt with.

Healthier Budgets

What does a healthier state budget look like? The best examples can be found in the Midwest.

Here’s Nebraska, which has about $1,000 of debt per person:

Mercatus snapshot for Nebraska

Nebraska exhibits strong fiscal health across all categories. On a cash basis, Nebraska has between 3.81 and 5.02 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 7 percent, producing a surplus of $294 per capita.

– Mercatus Center at George Mason University

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Debt

How Much Student Debt Does Each State Hold?

Crippling student debt in the U.S. has reached a record high of $1.5 trillion nationwide. Today’s map breaks down which states bear the highest burden.

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How Much Student Debt Does Each State Hold?

Education may be priceless, but the costs of obtaining it are becoming steeper by the day.

Almost half of all university-educated Americans rely on loans to pay for their higher education, with very few graduating debt-free. Total U.S. student debt has more than doubled in the last decade—reaching a record high of $1.5 trillion today.

Today’s data visualization from HowMuch.net breaks down the average student debt per capita, to uncover which states shoulder the highest burden in this growing crisis.

Students are Paying Through the Nose

Before diving into the graphic, let’s take a quick look at why student debt is racking up. The ballooning costs to attend college today compared to thirty years ago is one driving factor.

College Tuition
Source: The College Board 2018 report.

What’s more, these figures don’t include the expenses for accommodation and other supplies, which can add another $15,000-$17,000 per year.

The United States of Student Debt

In the state map above, it’s immediately obvious that Washington D.C. tops the list. While the nation’s capital is the most educated metropolitan area in the country, it also suffers from $13,320 in student debt per capita.

At approximately 147% above than the national average of $5,390, Washington D.C.’s debt burden per capita is almost double that of the state in second place. Georgia comes in with $7,250 debt per capita, 34.5% above the national average.

StateStudent Debt per CapitaDifference from Average
U.S. Average$5,390
Alabama$4,920-8.7%
Alaska$4,030-25.2%
Arizona$5,170-4.1%
Arkansas$4,330-19.7%
California$4,530-16.0%
Colorado$6,18014.7%
Connecticut$5,8909.3%
Delaware$6,04012.1%
District Of Columbia$13,320147.1%
Florida$4,940-8.3%
Georgia$7,25034.5%
Hawaii$3,780-29.9%
Idaho$5,050-6.3%
Illinois$5,8007.6%
Indiana$5,300-1.7%
Iowa$5,300-1.7%
Kansas$5,4801.7%
Kentucky$4,870-9.6%
Louisiana$5,360-0.6%
Maine$5,340-0.9%
Maryland$6,74025.0%
Massachusetts$6,14013.9%
Michigan$5,8007.6%
Minnesota$6,28016.5%
Mississippi$5,8708.9%
Missouri$5,270-2.2%
Nebraska$5,080-5.8%
Nevada$4,170-22.6%
New Hampshire$5,8608.7%
New Jersey$6,09013.0%
New Mexico$4,070-24.5%
New York$6,09013.0%
North Carolina$5,240-2.8%
North Dakota$5,5102.2%
Ohio$6,22015.4%
Oklahoma$4,540-15.8%
Oregon$5,7606.9%
Pennsylvania$6,21015.2%
Rhode Island$5,3900.0%
South Carolina$5,8708.9%
South Dakota$5,170-4.1%
Tennessee$5,050-6.3%
Texas$4,970-7.8%
Utah$4,350-19.3%
Vermont$5,4801.7%
Virginia$5,8208.0%
Washington$4,270-20.8%
West Virginia$4,020-25.4%
Wisconsin$4,850-10.0%
Wyoming$3,610-33.0%

Rounding out the five states with the most student debt per capita are Maryland, Minnesota, and Ohio, in that order. On the flip side, Wyoming has the least debt per capita ($3,610), which is 33.0% lower than the national average. Hawaii follows right behind at $3,780, and 29.9% below the national average.

Interestingly, a growing population on the West Coast helps to lower the debt burden for states like California, even despite the strong presence of prestigious schools. Home to Stanford, USC, UCLA, CalTech, and more, the Golden State surprisingly only has $4,530 in debt per capita.

The Last Straw?

Today’s Americans are more educated than ever before, but the sticker shock is causing some whiplash. This overall trend of spiraling student debt has significant implications on a person’s life trajectory. With many graduates unable to repay their loans on time, more of them are delaying major life milestones, such as starting a family or becoming a homeowner.

In efforts to curb this crisis, many 2020 presidential hopefuls have already started proposing plans to cancel or forgive student debt—with close attention on mid- to low-income households that would benefit the most from reduced loans.

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Visualizing the Evolution of Consumer Credit

See how consumer credit has evolved through the ages — from its ancient origins, to the use of game-changing technologies like artificial intelligence.

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The origin of credit dates all the way back to ancient civilizations.

The Sumerians and later the Babylonians both used consumer loans in their societies, primarily for agricultural purposes. The latter civilization even had rules about maximum lending rates engraved in the famous Code of Hammurabi.

But since then, consumer credit — and how we calculate creditworthiness — has gotten increasingly sophisticated. This is so much the case that technology now used in modern credit scoring would seem completely alien to people living just a few decades ago.

Video: Consumer Credit Through the Ages

Today’s motion graphic video is powered by Equifax, and it shows the evolution of consumer credit over the last 5,000 years.

The video highlights how consumer credit has worked both in the past and in the present. It also dives into the technologies that will be shaping the future of credit, including artificial intelligence and the blockchain.

A Brief History of Credit

We previously visualized the 5,000-year history of consumer credit, and how it dramatically changed over many centuries and societies.

What may have started as agricultural loans in Sumer and Babylon eventually became more ingrained in Ancient Roman society. In the year 50 B.C., for example, Cicero documented a transaction that occurred, and wrote “nomina facit, negotium conficit” — or, “he uses credit to complete the purchase”.

Modern consumer credit itself was born in England in 1803, when a group of English tailors came together to swap information on customers that failed to settle their debts. Eventually, extensive credit lists of customers started being compiled, with lending really booming in the 20th century as consumers started buying big ticket items like cars and appliances.

Later, the innovation of credit cards came about, and in the 1980s, modern credit scoring was introduced.

The Present and Future of Credit

Learn about the modern credit landscape, as well as how technology is changing the future of consumer credit.

The modern numeric credit score came about in 1989, and it uses logistic regression to assess five categories related to a consumer’s creditworthiness: payment history, debt burden, length of credit history, types of credit used, and new credit requests.

However, in the current era of big data and emerging technologies, companies are now finding new ways to advance credit models — and how these change will affect how consumers get credit in the future.

Modern Tech

Consumer credit is already changing thanks to new methods such as trended data and alternative data. These both look at the bigger picture beyond traditional scoring, pulling in new data sources and using predictive methods to more accurately encapsulate creditworthiness.

Future Tech

In general, the future of credit will be shaped by five forces:

  1. Growing amounts of data
  2. A changing regulatory landscape
  3. Game-changing technologies
  4. Focus on identity
  5. The fintech boom

Through these forces, new credit models will integrate artificial intelligence, neural networks, big data, and more complex statistical methods. In short, credit patterns can be more accurately predicted using mountains of data and new technologies.

Finally, the credit landscape is set to shift in other ways, as well.

Regulatory forces are pushing data to be standardized and controlled directly by consumers, enabling a range of new fintech applications to benefit consumers. Meanwhile, the industry itself will be focusing in on identity to build trust and limit fraud, using technologies such as biometrics and blockchain to prove a borrower’s identity.

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