New data released today by the Corporation for Enterprise Development (CFED) show more Illinois graduating students are struggling with debt than almost anywhere else in the country, ranking 43rd among all states. CFED’s 2015 Assets & Opportunity Scorecard also ranked the state 36th for the average amount of debt carried by college graduates ($28,543).
The troubling data underscores the need to improve access to programs that help low- and moderate-income households save and plan for postsecondary education. This includes implementing changes to Illinois’ Bright Start 529 college savings program, such as automatic enrollment and matched savings incentives—both of which have helped expand 529 participation among lower-income households in other states.
“Too few low-income families are able to access the Illinois Bright Start Program,” said Lucy Mullany, Senior Project Manager for Financial Empowerment Policy at the Heartland Alliance and Coordinator of the Illinois Asset Building Group, an Assets & Opportunity Network lead organization.“We need to create a savings program in this state that makes it easier for families to save for college. Ultimately, our state needs to follow the lead of other states and adopt a universal Children’s Savings Account program that ensures every student has an account in their name specifically for college education or vocational training.”
CFED’s 2015 Assets & Opportunity Scorecard offers the most comprehensive look available at American’s ability to save and build wealth, fend off poverty and create a more prosperous future. The Scorecard provides rankings for the 50 states and District of Columbia on both the ability of residents to achieve financial security and policies designed to help them get there. Illinois ranks in the bottom half of the country with an outcome ranking of 33 but in the top half for its policy response, with a ranking of 12.
The Scorecard evaluates how residents are faring across 67 outcome measures in five different issue areas—Financial Assets & Income, Business & Jobs, Housing & Homeownership, Health Care and Education. Illinois finds itself among the middle of all states in four of the five issue areas. The state’s poorest showing was in Housing & Homeownership, ranking 41st overall and receiving a “D” rating, due in part to a high foreclosure rate (3.68%) and high rate of cost-burdened homeowners. Nearly one-third (32.8%) of the state’s homeowners spend more than 30% of their household incomes on monthly owner costs. Illinois also received a “C” in Businesses & Jobs. This rating was largely driven by high rates of unemployment (7.7%) and underemployment (13.7%), with the state ranking 45th and 44th on these measures, respectively. The state’s high bankruptcy rate (5 per 1,000 people) and higher levels of average credit card debt ($10,452) are responsible for its ranking of 29th in Financial Assets & Income. Similarly, high levels of college debt pushed Illinois’ ranking in Education down to 23rd overall, giving the state a “C” in this area.
The Scorecard also evaluates 68 different policy measures to determine how well states are addressing the challenges facings residents. While Illinois has adopted many policies to alleviate the pressures faced by low- and moderate-income families, many challenges and opportunities remain for the state to make policy improvements. Illinois ranked in the top half of all states across the policy issues areas, including Financial Assets & Income (16th), Businesses & Jobs (23rd), Housing & Homeownership (13th), Health Care (1st) and Education (13th). Illinois also became the first and only state to be recognized for adopting an automatic Individual Retirement Account, a new policy addition to the 2015 Scorecard.
Nationally, the Scorecard data finds millions of Americans have been left out of the economic recovery with little opportunity to take charge of their financial lives or plan for a more secure future. Large percentages of these households are experiencing profound levels of exclusion from the financial mainstream as they struggle in low-wage jobs and are forced to rely on fringe, often high-cost financial services just to make ends meet. Among the key findings:
- Low-wage jobs have increased in all but two states. Thirty-six states and Washington, D.C., saw decreases in average annual pay between 2012 and 2013.
- Nationally, 56% of consumers have subprime credit scores, meaning they cannot qualify for credit or financing at prime rates and are more likely to use costly alternative financial products. One in five households regularly relies on fringe financial services, such as payday loans, to meet their needs.
- Liquid asset poverty rates – the percentage of households with less than three months of savings at the poverty level – are particularly high in states with the greatest levels of income inequality. This trend is most evident in poor states in the South and Southwest and high-cost states on the East and West coasts, all of which have large populations of color. If families can’t save, closing the wealth gap is all but impossible.
- In 34 states, the gap in homeownership rates between households of color and white households has widened. The 10 states where the gap is greatest are Rhode Island, New York, Massachusetts, Connecticut, Wisconsin, South Dakota, North Dakota, Minnesota, New Jersey and Kentucky.
- High-cost (or subprime) mortgage loans—one of the main culprits behind the housing boom and bust—are on the rise. The percentage of homeowners with high-cost mortgages is higher in 42 states than it was in 2010.
“The economic recovery experienced by some segments of our society is barely a blip in the lives of millions of Americans who continue to struggle in low-wage jobs and have little ability to save and build a better future for themselves and their children,” said Andrea Levere, president of CFED. “In far too many cases, these households are living outside the financial mainstream, relegated to using often high-cost financial services that trap them in a cycle of debt and financial insecurity.”
To read an analysis of key findings from the 2015 Assets & Opportunity Scorecard, click here. To access the complete Scorecard, visit http://assetsandopportunity.org/scorecard. Visit our media resources page for interactive data tools, including our asset poverty calculator, downloadable infographics, customizable charts and maps, and other data visualizations.
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CFED empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future. As a leading source for data about household financial security and policy solutions, CFED understands what families need to succeed. We promote programs on the ground and invest in social enterprises that create pathways to financial security and opportunity for millions of people. Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.
The Illinois Asset Building Group (IABG) is a statewide coalition committed to increasing access to the tools people need to build financially secure futures for themselves and their children. IABG’s work across issue areas includes examining barriers and solutions to the persistent racial wealth gap. IABG a project of Heartland Alliance and serves as the lead state organization in the Assets & Opportunity Network.