SIOUX FALLS, SD (KELO) — South Dakota may have one of the highest percentages of student debt, but what those students owe is lower than many other states, according to data from the 2021 fiscal year of the New York Federal Reserve.
In the last quarter of fiscal 2021, the average student loan debt was $28,218. The median balance was $15,865.
Other neighboring states like Minnesota ($33,961), Nebraska ($31,551), North Dakota ($30,542), Iowa ($29,845) and Wyoming ($30,581) are more students.
The New York Federal Reserve lists the state’s total student loan debt at around $3.8 billion.
Shuree Mortenson, director of communications for the South Dakota Board of Regents, said New York Federal Reserve data is a standard used by many, including the BOR.
BOR data shows that the average debt for public school graduates in fall 2020 or spring 2021 was $24,499. The loan amount varies by campus.
According to the ALCU’s December 2021 report, 73% of four-year college graduates in the state had debt in 2020. The average debt for 2020 graduates was $32,029. Federal Reserve data is for all borrowers, not just recent graduates.
Studies show that more than 100,000 South Dakota borrowers would qualify for some type of student loan forgiveness under the White House Student Loan Plan. The plan was blocked after a Texas federal judge ruled the plan illegal.
The plan targeted cancellation of income levels and different amounts of debt cancellation. For example, the US Department of Education has stated that “nearly 90% of relief dollars will go to those earning less than $75,000 a year.”
Pattie Berkner is a financial advisor at Legacy Financial Partners, a private wealth advisory firm of Ameriprise Financial Service LLC in Brookings. Berkner said borrowers should never expect a move to happen because it might not happen.
“You have to assume that’s not going to happen,” Berkner said. Borrowers should keep paying their student loans, she said.
If the student debt program returns, borrowers can apply, but they shouldn’t plan for that to happen, Berkner said.
Berkner said his finance group primarily works with older graduates than recent graduates. A parent or grandparent can ask about the options on behalf of their child or grandchild, she said.
However, Berkner stressed that it’s always a good idea to contact a financial adviser, regardless of adulthood or income.
“It’s never too early to start,” Berkner said.
The Federal Reserve Board of Governors said in May 2022 that 96% of borrowers who had student debt had student loans.
About 135,600 borrowers have student loan debt in South Dakota, according to the New York Federal Reserve. Most are up to date on payments. The New York Federal Reserve said the state’s delinquency rate was 5.3%. The percentage applies to a borrower who has not made a payment on at least one loan in 90 days.
Although the White House plan for student debt cancellation has stalled, borrowers had/have a few options. Borrowers can request forbearance, which means they could temporarily stop making payments or temporarily make a smaller payment. The U.S. Department of Education’s federal student aid office said borrowers might consider income-contingent payments because the borrower would continue to repay the debt. Interest continues to apply if a loan is forborne.
The same federal bureau also suspended loan repayments, established a 0% interest rate on qualified federal loans, and halted collection of delinquent loans during COVID-19. The period ends on December 31.
Systemwide in public schools across the state, 48% of the loans students receive come from federal loan programs, according to the BOR’s fall 2022 report. Total federal student loan debt at BOR institutions was $131,503,999 in fiscal year 2021.
Loans are only part of student debt. The Federal Reserve Board of Governors said in its 2022 report that of those with student debt, 19% borrowed with credit cards, 4% with a home equity loan, and 11% with some other form. Additionally, 24% of borrowers had one or more forms of student debt in addition to student loans for their own education.