The Relationship Between Student Debt and College Completion

Students participate in commencement exercises.

The District of Columbia is the student debt capital of America. At nearly $41,000, the average student loan burden for someone living in Washington, D.C., is $10,000 higher than in any other state.

Yet, the nation’s capital is also the most educated state or territory in America; it is the only place where a majority of people between ages 18 and 65 have at least an associate’s degree. So while the District of Columbia does lead in student debt, at least the accumulated loans appear to have led to successful degrees.

The link between debt and educational attainment is too frequently missing from national discussions on student loans. While it is easy to bemoan high levels of student debt and big numbers—such as the more than $1 trillion that Americans currently owe—not all loans are inherently bad. The major issue is whether students who borrowed completed their education. Data bear out this assertion. Borrowers who earn a degree are much less likely to default on their loans than those who do not, and dropouts represent an estimated 60 percent of all people who default on their loans.

In other words, it is far better to be a bachelor’s degree graduate with $28,400 in loans—the national average in 2013—than a dropout who owes $10,000. Similarly, from a state perspective, high levels of indebtedness may not be as problematic if they are due to a lot of students earning degrees.

To measure the relationship between debt and college completion, the Center for American Progress conducted an analysis that compared the total amount of student loan debt owed in each state with the number of adults ages 18 or older who earned at least an associate’s degree. To determine the loan amounts, CAP drew on state-by-state figures that the White House released in March. The number of college graduates between ages 18 and 65 is a three year average from 2011 through 2013 from the U.S. Census Bureau’s American Community Survey. Because the American Community Survey does not separate people who earned a certificate from college dropouts, certificate graduates were not included in the count of college completers.


Analysis indicates that the average debt of student borrowers can often be misleading. In some states, small debt burdens for borrowers look much worse given low levels of postsecondary attainment. In other states, a high average debt for borrowers may not be as concerning because so many residents are earning postsecondary degrees.

In all states, the average amount of debt per graduate is lower than the average debt per borrower. This is to be expected, since the number of college graduates includes people who did not have to borrow for their education or who have already paid off their loans.

Louisiana and Virginia illustrate the importance of thinking about student loans in the context of college completion. At $26,250, Louisiana’s average debt per borrower is not far from the national average. But the state has a very low attainment rate—only 26 percent of adults between the ages of 18 and 65 have an associate’s degree or higher. As a result, it has the second highest debt per graduate in the country.

Virginia tells the opposite story. Its average debt per borrower—$28,467—is the fourth highest in the country. But it also has a high attainment rate, with 41 percent of adults holding at least an associate’s degree. When the number of graduates is used to measure student loan debt, Virginia has the 11th lowest debt per degree holder.

The table below presents the levels of outstanding student loan debt per borrower and per graduate in all 50 states and the District of Columbia. As shown, Louisiana is not the only state where low levels of debt among borrowers mask concerns about college completion. Similar problems can be seen in Mississippi, Ohio, Indiana, and Arkansas. Meanwhile, states such as Maryland, Vermont, Florida, and Colorado have results that look more like those of Virginia, with high attainment rates reducing concerns about larger debt levels.

As for Washington, D.C., it still ranks highest in debt even when completion is taken into account. This illustrates a different anomaly: Nearly half of all degree holders in the nation’s capital have a graduate degree, which means they are likely to carry greater debt. That is what happens when 1 out of every 12 residents is a lawyer.

The rise of student debt represents the undoing of affordable higher education. While this is a legitimate problem, debt itself is not inherently bad if it allows students to earn high-quality degrees and credentials that they could not otherwise afford. It is only when loan debt is viewed through the lens of college completion that the bigger picture of where it is truly worrying emerges.

Note: All figures in the table can be downloaded here.

Ben Miller is the Senior Director for Postsecondary Education at the Center for American Progress.