Student loan interest could be cut in half if President Obama approves a bipartisan bill pegging those rates to the economy. But as debt holders await that approval, and for the legislation to take effect, they might consider relocating to a town with a better job market.
Current student debt loads can vary dramatically from city to city, and those differences are at least partly linked to unemployment rates in those areas, according to a recent study.
Memphis, Tenn., is the city with the highest average student debt load, according to a survey of 500,000 Manilla.com budgeting tool users. Residents there averaged a $21,578 student loan balance, according to the July study. That compares with a national average of just over $12,814 per Manilla.com user with student debt.
Residents of Las Vegas owe about $19,571 on their student loans; residents of Atlanta owe about $18,471, and student debt holders in Birmingham, Ala. owe about $18,088 on average, according to the study.
"When you look at those top markets like Memphis, Las Vegas, Atlanta, they also happen to be markets where the unemployment rate is very high," said Manilla.com CEO Jim Schinella.
The unemployment rate was 10 percent Memphis and 10.1 percent in Las Vegas in June, according to the Bureau of Labor Statistics.
Cities with the lowest average student loan balances had only about half the amount that cities on the higher end had. Residents of Knoxville, Tenn., who had the lowest average student debt load, had an outstanding balance of about $9,567, according to Manilla.com data. Residents in the Harrisburg, Pa., Waco, Texas, and Wilkes-Barre, Pa. all had student loan balances of less than $11,000, Manilla.com reported.
The Harrisburg area had an unemployment rate of 7.2 percent, the Waco metropolitan area had an unemployment rate of 6.9 percent and Knoxville had an unemployment rate of 7.5 in June, according to BLS data.
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"Syracuse was previously in the top 10 of highest-debt markets. Over the period of the nine months we've been studying the data...the unemployment rate has come down over 1 percent," Schinella noted. "And in that same period, they are no longer in the top 10 list" in terms of highest debt, Schinella said.
Student debt holders in Syracuse decreased their average student loan debt by more than 8 percent in the second quarter of this year, according to Manilla.com.
"There's clearly a relationship between the unemployment rate and the ability to pay student loans," Schinella told "Big Data Download."
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