Men and women across the United States are burdened by $1.5 trillion in student loan debt, and many reside in Bradenton and Sarasota, according to a new study.
Student Loan Hero, a loan management tool, studied the rate of debt repayment across America, focusing on the top 100 metropolitan areas. The company examined more than 441,000 loans belonging to about 125,000 users on MyLendingTree, its parent company.
Analysts tracked which loans had a remaining balance after 15 years, ranking the slowest and fastest areas for student loan repayment. The Sarasota metro area — Sarasota, Bradenton, North Port and other surrounding areas — landed in the No. 10 spot, making it one of the slowest in Student Loan Hero’s study.
About 9.8 percent of area borrowers still owed money on their student loans after 15 years, while 2 percent owed on loans after 20 years, according to the study.
An average loan balance in the Sarasota area was $3,667 after 15 years, about $300 more than the nationwide average.
“In general, we know that Floridians seem to have trouble paying their debts, overall, which results in some of the lowest credit scores in the country,” Kali McFadden, the company’s lead analyst, said in an email to the Bradenton Herald.
“This may be because the state was especially hard hit by the Great Recession, and has suffered some severe environmental challenges in the intervening years, such as the BP oil spill in 2010 and more recent hurricanes.”
“People who had student debt during those periods may well have fallen behind or were able to go onto income based repayment plans, or were even granted deferment periods due to economic hardships,” she continued. “A potential problem with those reprieves is that interest still accrues (usually) and debt amounts continue to go up.”
The factors vary by each metropolitan area, such as New Orleans or Columbia, S.C., where a lower-than-average income could make it hard for borrowers to make substantial payments, the company reported.
Analysts also pointed to San Francisco, where the average income is much higher than the national average: $72,400 compared with $51,960, they reported, citing the Bureau of Labor Statistics.
Though income is high in San Francisco, its residents also grapple with a high cost of living. Perhaps living expenses are the reason for San Francisco’s No. 2 spot on the list, just behind New Orleans, the slowest area for student loan repayments.
“Even with their higher salaries, San Francisco borrowers appear to be having a hard time repaying debt of this magnitude in one of the nation’s most expensive cities,” the company reported.
Loans were paid off the fastest in Harrisburg, Pa., where the average income was $2,420 less than the national average, but the cost of living was more reasonable than other areas, according to the study.
Lengthy repayment plans are often necessary for people who require a lower payment, but costs are greater in the long run.
“While stretching out repayment will save you money from month to month, it will also mean you’ll spend a lot more on interest,” the company reported. “Plus, you might be eager to get student loans out of your life once and for all.”
Student Loan Hero offered several tips to lessen the burden of student loans. It said borrowers should make extra payments whenever possible, and switch to bi-weekly “half payments,” resulting in a t least one extra payment each year.
“Just make sure your loan servicer is applying your extra payments the right way (i.e., to the principal rather than to interest),” the report states.
Borrowers can muster the courage to ask for a raise, switch jobs or launch a side hustle. They can prevent “lifestyle inflation,” the act of spending more money after a salary increase, or they could refinance their loans for new terms and better interest rates.
The company also urged borrowers to research programs for loan forgiveness or repayment assistance, or jobs that offer a loan-matching benefit.
“While you may want to get ride of your student loans ASAP, you also probably have other financial priorities, such as building an emergency fund and saving for retirement,” it concluded. “Ultimately, it’s up to you to find the right balance between paying off student loans and achieving your other money goals.”