In over half of U.S. States, Student Debt Exceeds the State Budget.

The Economic Impact is Extreme.

Student loan debt in 28 states now exceeds the state budget of those states. This is based upon data from the Department of Education and a Wikipedia compilation of recent state budget data. The amount of interest (owed largely to the U.S. Department of Education) being taken out of these states every year often rivals or even exceeds core, defining industries in these states.

The loans are more than double the state budgets of Arkansas, Mississippi, Georgia, Alabama, and North Carolina.

It is interesting to note that the worst hurt states by this measure tend to be Southern, historically conservative states, but extend generally to other “Red” states throughout the union. By looking at the average individual debt loads per borrowers vs average earnings for all the states, a similar map emerges:

The impact this is having on these states is dramatic. In the State of Maine, for example, the Department of Education takes more student loan interest out of the state than all the lobsters harvested each year. In North Carolina, annual student loan interest exceeds the state’s top 5 agricultural exports combined.

Florida is another sobering example. Every year, Florida’s largest employer, Disney World, takes in about $5 Billion in annual revenue. Interest on federal student loans, however, exceeds $6 Billion:

In other states with a large number of professional sports franchises, more student loan interest is taken out of state than the combined annual revenue of all of the NFL, MLB, and NBA teams. A couple of notable examples are Ohio and California:

See other examples of the dramatic impact the federal student loan program is having on the states here.

Here are a few examples of the real people this is harming:

Today, the federal student loan portfolio is growing by roughly $200 Billion/year, between interest accrual ($107 Billion), and new loans ($90 Billion).

This cannot continue. The economic activity that is being actively stolen away from the states is something that no federal agency should be able to engage in.

While The governors and state legislators of these states cannot change federal law, it is clear that the federal government is unwilling to restrain itself. The states, collectively, must demand that federal lawmakers rein in the Department of Education and its contractors.

At a minimum, this should include returning standard, constitutional bankruptcy rights to student loans. This act, alone, would serve to constrain the Department of Education significantly. It would force them to lend less money, reform the program (if not scrap it altogether and replace it), and would immediately bring down the price of colleges.

Frankly, however, The Department of Education could/should be closed, the loan program should be shut down, and the entire process of supporting higher education in this country should be re-invented so that college prices are rational, the schools are responsible, and the quality is better. All very achievable goals, and long overdue.

If you agree, please sign this petition, and become a volunteer member of StudentLoanJustice.Org.