Student Debt By ZIP Code: Low-Income Residents Owe Less, Default More Than Wealthy, Study Says

Students from high-income areas tend to take out higher loans, but they're not the ones defaulting. It's low-income ZIP codes -- often with lower balances -- that have higher delinquency rates. That's according to a study out Monday from think tanks Generation Progress and the Washington Center for Equitable Growth, which together found that the labor market often makes people who owe a little a lot more likely not to pay.

“Our analysis suggests that student debt may actually be reinforcing economic inequality, rather than reversing it,” economist Marshall Steinbaum said in a news release. “'Non-traditional' borrowers come from lower-income backgrounds and don’t actually take on high-debt burdens...Moving forward, policy makers must pay attention to the geographical distribution of student debt if they ever hope to adequately address rising inequality and the erosion of middle-class wealth.”

The study, called "Mapping Student Debt," identifies the ZIP codes with the highest average loan balances, delinquencies and median household incomes. Among the cities owing the most were Nuiqsut, Alaska; San Simon, Arizona and Waterville Valley, New Hampshire. Cities with high delinquency rates -- in which borrowers are not making payments -- included Hillsboro, Alabama, where median income is approximately $32,000; Felda, Florida, where it is about $28,000; and Cibicue, Arizona, where it's just under $10,000.

"For the country as a whole, there’s an inverse relationship between zip code income and delinquency rates," Steinbaum and another economist, Kavya Vaghul, wrote in a related column posted Tuesday.

They explained that graduate students tend to have larger loans but are generally able to pay them back due to the higher income they earn with these advanced degrees later on. Meanwhile, students who attend for-profit colleges may take out smaller loans but default more often when they have trouble finding high-paying jobs. In addition, people living in low-income areas often have difficulty accessing credit, according to the economists.

The study, also produced with the campaign Higher Ed, Not Debt, was based on 2015 data from the financial site Experian and 2013 information from the American Community Survey. It didn't put loan levels into dollar amounts, though a report from the Institute for College Access and Success showed earlier this year that about 69 percent of graduates in 2014 owed an average of $28,950.