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Where does debt come from? How does it get so out of hand? And why is it such a difficult topic to discuss?On South Carolina Public Radio's InDebted, host Scott Morgan explores the issue of debt in the Palmetto State, including medical debt, student loan debt, short-term loan services, financial literacy, and more. According to research by the Urban Institute on the amount of personal debt burden across the U.S., eight of the top 50 counties with the most debt were in South Carolina, with more than half of the residents living with excessive debt. Join us for a deep dive into the factors that make our state one of the worst places for debt in the country and the stories of real South Carolinians living in this ecosystem of debt.Interested in sharing your personal story with debt? Learn more about our InDebted Profiles series here.

So, South Carolina is the worst place for debt in the United States, you say?

South Carolina's debt problem is much more complicated than the easy answers and assumptions often leveled at those in debt. The numbers here are in every category among the worst in the country for personal debt.
Scott Morgan
South Carolina Public Radio
South Carolina's debt problem is much more complicated than the easy answers and assumptions often leveled at those in debt. The numbers here are in every category among the worst in the country for personal debt.

This article is part of the series InDebted — South Carolina Public Radio's deep dive into the ecosystem of debt in the Palmetto State.

  • This story was updated on March 27,2023, to reflect that with North Carolina adopting Medicaid expansion, South Carolina is now one of 10 states that has not yet expanded Medicaid access.

In the spring of 2021, I ran across a reportfrom 24/7 Wall Street that sent me down a two-year rabbit hole. I’m pretty susceptible to those anyway, but this one was different.

This one broke down the 50 counties in the United States with the highest percentages of residents whose debts have ended up in the possession of debt collectors, based on data from the Urban Institute.

South Carolina showed up on that list more times — seven — than any state except Texas (which placed 22 counties in the worst 50).

What struck me immediately were the ratios. Seven counties from one state is high; it's crazy high, however, when you realize that this state only has 46 counties in it. Texas does have more total counties, on the list and overall (22 out of its 254), but the percentage of residents with debt in collections in South Carolina is far and away the worst.

One in every six-and-a-half counties in South Carolina are among the worst of the worst. If Texas had South Carolina’s ratio, it would have put 39 counties on that list.

Not that 22 out of 50 is anything to put on your résumé. But it would be almost twice as bad if they were like us.

And that's where this whole series started. With raw numbers and basic math. And that math has gotten worse since that 24/7 Wall Street report. Last summer, Urban Institute updated its data. South Carolina now has eightcounties among the worst 50 (the data measures 3,059 out of 3,243 counties and county equivalents, some of which have no data); and it has 16 among the worst 100 – which means one in every three counties are bottom-of-the-barrel when it comes to the share of residents burdened by debt.

That math also tracks among people. One in three South Carolinians overall has some level of debt in collections, mirroring the state’s county-level ratio.

That’s overall. If you look only at people of color in the state, half have debt that is in collections.

“When I look across the country I see that over one in four adults with credit records have some form of debt in collections on their credit report,” says Signe-Mary McKernan, vice president for labor, human services, and population at the Urban Institute. “But when I look in South Carolina, you know, the number's much higher there. Instead of the 26 percent national number, it's 37 percent.”

Which, at its heart, means a lot of your neighbors and mine are paying a lot more for things they need in their lives than they need to be paying.

“Debt in collections can lower your credit score,” McKernan says. “Subprime borrowers pay about $3,000 more in interest when buying a $10,000 used car; $1,300 more when buying a refrigerator; nearly $400 more when repairing a car. And if you go to buy a house with a subprime credit score, getting that mortgage, you could pay $87,000 more in interest on a $250,000 house.”

If that sounds like a pricey house, know that Zillow tagged the median South Carolina home at the end of January at $269,424.

But … why though?

The obvious question when looking at how bad the debt problem is, of course, why us? What makes South Carolina stand so far behind the pack when it comes to debt burden?

The answer, unsurprisingly, is complicated. But over the course of my reporting, I found four overarching areas contributing to the debt problem in South Carolina. Each of these factors exists in other states, but they combine in a nearly unique way here.

The Lists
South Carolina routinely ranks in the bottom half among states on multiple studies (from various sources) measuring things like credit card debt, median household income, medical debt, student loan debt, short-term loan interest rates, poverty rates, high school graduation rates, literacy rates, and financial literacy.

And that’s not even counting how eviction-happy we are. At last count, we have both the most top eviction-prone large and medium-sized cities in the country and 47 of the 100 most eviction-prone rural towns in the United States.

The Earnings
South Carolinians are not particularly wealthy. Median household incomes and average salaries among workers remain mediocre at best.

Oxfam's annual report on the best and worst states for workers has South Carolina near the bottom overall (47th out of 52, with Puerto Rico and the District of Columbia included) and dead last in wage policies – a measure of how the state's minimum wage ($7.25 per hour, the lowest permitted nationally) and unemployment payments (among the worst in the United States, according to Forbes) factor into cost of living (which also ranks poorly in those Forbes numbers).

The wealth gap, especially when broken down to compare white households with households of color, is also quite prevalent here. Four South Carolina counties out of 15 with directly comparable average household income data from the Urban Institute show that white households have roughly twice the annual income of households of color, with the most exaggerated examples being Darlington, Beaufort, and Charleston counties.

Poverty rates in Beaufort and Charleston counties are also the most exaggerated when comparing white numbers to Black and brown numbers. Roughly twice as many Black residents, per capita, in these two counties live at or below the poverty line compared to white; for Hispanic residents, that rate balloons to as much as four times as many.

The Loans
South Carolina borrowers can tap into types of loans – short-term products – that not everyone else can. Twenty-four states and the District of Columbia ban auto title lending; 12 states and D.C. prohibit payday loans; 19 states and D.C. cap interest rates on these types of loans at 36 percent.

South Carolina has none of those restrictions. The Center for Responsible Lending calculates the average effective interest rate on a $300 loan in South Carolina to be 395 percent.

There has been a concerted movement by the South Carolina Fair Lending Alliance, which describes itself as “a group of non-profits, community development financial institutions, communities of faith, and concerned citizens,” to get a 36 percent rate cap passed in South Carolina.

The measure does have bipartisan support in the State Legislature, but it's a hard fight. South Carolina has an active short-term lending lobby that, according to the South Carolina Ethics Commission and OpenSecrets.org, has contributed hundreds of thousands of dollars to state and federal political candidates of both major parties since 1990.

The Provision
As of March 27,2023, South Carolina is one of 10 remaining states to have not expanded Medicaid access under Affordable Care Act provisions, and it is not planning to join the majority of states anytime soon. In 2021, Gov. Henry McMaster turned down federal incentives to expand Medicaid access, effectively calling expansion a bad deal for the state. He also wants work requirements for Medicaid recipients.

A six-year study by the Kaiser Family Foundation published in 2020 shows that in states that have expanded Medicaid access, health care affordability among residents improved, as did access to care. And a three-year study that same year by the Commonwealth Fund foundstates that expanded Medicaid access saw reductions in health care costs to the state.

While these four overarching factors obviously do not exhaustively explain the scope of the debt problem in South Carolina, they do at least help explain what sets the state so far off to the side. As more states move to level consumer and patient protections, South Carolina remains effectively static. And that means that while other states are moving forward, they’re getting further away from us.

SC Public Radio's podcast InDebted takes a deep dive into these causes, effects, and contributing factors behind South Carolina's debt problem. Only not nearly in such a data-heavy way. Over eight episodes, your neighbors and mine will break down what it's like to live where debt is such a part of life that most of us tune it out.

Scott Morgan is the Upstate multimedia reporter for South Carolina Public Radio, based in Rock Hill. He cut his teeth as a newspaper reporter and editor in New Jersey before finding a home in public radio in Texas. Scott joined South Carolina Public Radio in March of 2019. His work has appeared in numerous national and regional publications as well as on NPR and MSNBC. He's won numerous state, regional, and national awards for his work including a national Edward R. Murrow.