Having student loan debt hanging over you for years or even decades can be overwhelming. Worse, having to put such a big chunk of your paycheck toward monthly student loan payments can prevent you from being able to do things like save for retirement or buy a house. And that can make it feel like you’ll never get ahead.
Fortunately, several states have developed innovative programs to help student loan borrowers pay off their loans. It’s a win-win: States attract young professionals to areas where they’re losing residents, and you get student loan debt relief.
Moving to a new state might sound like a drastic move, but you get to experience a whole new place and maybe even a lower cost of living or better job opportunities — all while paying down your student loan debt. The only question left to ask yourself is which state to move to.
States That Will Pay Off Your Student Loans for Moving There
Most U.S. states have state-based student loan forgiveness programs. Some states will even repay your student loan debt just for moving there. These programs attract younger, college-educated populations to stimulate the local economy.
Before you pack your bags, read the eligibility requirements to ensure the program is the right fit for you. For example, some state programs have income thresholds or housing purchase requirements. But so as long as you’re in it for the long haul, adventure and freedom from student loan debt await you in one of these states.
- Payment Amount: Up to $15,000 over five years; no income taxes for five years
- Requirements: Be a new resident; have a student loan balance in your name; have an associate’s, bachelor’s, graduate, or professional degree; have an established permanent address in a qualifying county; be sponsored by a city, county, or employer who provides matching funds
- Pros of Moving to Kansas: Low cost of living; easy commutes; plenty of entertainment options in the cities
- Cons of Moving to Kansas: Few job opportunities in rural areas; high taxes; extra housing costs in some areas; lack of public transportation; few local entertainment options; extreme weather
If you need a job and enjoy the quiet life, Kansas designated 95 of its 105 counties as rural opportunity zones, meaning it should be easy to find a place with a student loan repayment opportunity and miles of wide-open spaces.
However, your significant other may have trouble finding employment in some parts of the state, and it’s possible for the additional housing fees in some areas of Kansas to eat into the income tax benefit.
And with its lack of nightlife and limited entertainment options around most of the state, it could end up costing you a pretty penny in at-home entertainment options like Netflix and Hulu or vacation money. There are also some really scary tornados, Toto.
But if you’re still interested, see the Kansas Department of Commerce website for more information.
- Payment Amount: Up to $25,000 over 10 years (limit of up to $2,500 per year, depending on your degree and education level)
- Requirements: Lived in Maine during the tax year you’re applying for credit; worked (including remotely and self-employed) in Maine or were deployed for military service or employed on a vessel at sea during the tax year; earned a bachelor’s or associate’s degree between 2007 and 2016 from a Maine school, earned a bachelor’s or associate’s degree after 2015 from any accredited school in the United States, or earned a graduate degree from a Maine school after 2015
- Pros of Moving to Maine: Low cost of living; low unemployment rate; low crime rate; low traffic
- Cons of Moving to Maine: Few higher-paying professional jobs; high income taxes; harsh winter weather; few commercial entertainment options
Maine offers the opportunity Maine tax credit to encourage grads, especially those in STEM (science, technology, engineering, and math) to move to this quiet coastal state.
Qualifying borrowers can deduct the total amount they paid from their state tax bill, up to $2,500 per year for 10 years, depending on their degree and the education level.
Plus, there are plenty of inexpensive recreational opportunities for outdoorsy types and beaches galore to let you indulge your inner sun worshiper.
However, there are few opportunities for professional-level jobs in Maine, meaning you might have a tougher time putting your college degree to work, and if you have a partner, they could have trouble finding work. A modest tax credit isn’t much use if you or your significant other end up underemployed.
Also, high income taxes might put a dent in your benefit from this tax credit, especially if you’re not used to paying state taxes.
For more information, see the Live + Work in Maine website.
- Payment Amount: Up to $30,000 or 15% of the purchased home’s value (whichever is less) toward your student loans
- Requirements: Purchase from an approved lender; remaining student loan balance of at least $1,000 up to a maximum of 15% of the sale price or $30,000; be in repayment or deferment; household income lower than $92,500 or $154,420, depending on location and household size; payoff amount must eliminate student debt; must take a homebuyer education class, live in the house for at least five years, and be a first-time buyer or qualify for an exception
- Pros of Moving to Maryland: Good job opportunities; proximity to both big cities and small towns
- Cons of Moving to Maryland: High cost of living; high taxes; heavy traffic; high crime rate
For those with student loan debt looking to buy a home, Maryland offers a ton of job opportunities and plenty of living options for a small state — everything from big cities to small towns and beachfront living.
And its SmartBuy 3.0 financing program, which provides student loan repayment assistance to borrowers who purchase a new home through an approved lender, lets you live in whatever part of the state you want.
However, there are some drawbacks. The program has strict eligibility requirements: Borrowers must have a minimum credit score of 720 and meet income thresholds. Plus, the payoff assistance must completely eliminate the borrower’s debt at the time of closing, which means your total student debt must be $30,000 or less.
And with its high cost of living, including higher home prices and taxes, the generous assistance might be moot.
For more information, see the Maryland Mortgage Program website.
- Payment Amount: Up to $15,000
- Requirements: Must have completed a STEAM (science, technology, engineering, arts, or math) degree within the last 10 years; open to those with associate’s, bachelor’s, and graduate degrees; must live and work in St. Clair or Huron counties; must find a job or start a business within 120 days of receiving funds; must be a new resident to either county
- Pros of Moving to Michigan: Reasonable cost of living; strong economy with diverse job opportunities; many choices for small town, urban, or coastal living
- Cons of Moving to Michigan: High unemployment rate; harsh, snowy winters; unpredictable weather; poor road conditions
Two counties in Michigan, Huron and St. Clair, routinely offer “reverse scholarships,” grants borrowers can use to repay their student loans in exchange for living and working in the county.
You get your approved student aid quarterly with no requirement for how long you have to stay. That means you can live in either county for however long you like, whether that’s one year or 10. So if you hate it, you don’t have to stay long.
Even better, Michigan’s economy is going strong and is no longer tied to its auto manufacturers. So there are plenty of diverse job opportunities, although the state still has a higher-than-average unemployment rate.
Plus, if you enjoy coastal living, Michigan’s Great Lakes give you the feel of being on the ocean without the higher cost of living you’d find on the coasts.
- Payment Amount: Up to $10,000 in Hamilton; up to $50,000 in Newburgh Heights
- Requirements: Hamilton applicants must be new residents and remain employed in Hamilton or Butler County; Newburgh Heights applicants must be first-time home buyers, purchase a home worth at least $50,000, and remain in that home for 10 to 15 years
- Pros of Moving to Ohio: Low cost of living; thriving economy; high-ranking school and university system; extensive parks and outdoor activities; plenty of entertainment options
- Cons of Moving to Ohio: Harsh summers and winters; high crime rates in bigger cities; lack of efficient public transportation
Ohio offers loan repayment assistance programs in two of its small towns: Hamilton, which is near Cincinnati, and Newburgh Heights, a small town just outside of Cleveland.
In exchange for working in select Hamilton neighborhoods, new residents can receive up to $10,000 in student loan repayment assistance for up to three years.
Those who buy a home in Newburgh Heights can get even more help — up to 50% of your student loan balance or a maximum of $50,000.
But to get this generous assistance, you must commit to Newburgh Heights for the long haul. Buyers get 80% of their award after the first 10 years and the remaining 20% after 15 years. So anyone who leaves Newburgh Heights before the first 10 years gets nothing.
The Newburgh Heights program is small. With only a sparse population of 2,000, there aren’t many homes available.
But if you’re considering making my home state of Ohio your new home, it has a lot going for it, including a thriving economy with plenty of job opportunities.
Additionally, Ohio has a ton of entertainment options — from its extensive parks, which offer free outdoor recreation, to its cities, which offer just about anything you can imagine. Fortunately, living in Hamilton or Newburgh Heights makes it harder to blow your budget on the bigger cities’ shopping, concerts, museums, amusement parks, and festivals, though they’re still accessible.
Should You Move for the Student Loan Repayment Benefit?
Student loan repayment assistance might make relocation attractive. But before you commit to moving across the country, there are several things you need to consider about the new place you’ll call home.
Cost of Living
If a state is more expensive to live in than where you live now, the cost of living could quickly outstrip any potential forgiveness benefit, especially if they don’t pay you much more than you’d make at home. You might be better off staying put and saving what you wouldn’t be spending in the more expensive location. On the other hand, moving to a state with a lower cost of living brings additional savings.
Moving to a new place for student loan forgiveness isn’t worth much if you can’t find a job. So research the job market before you contemplate the move.
Compare your potential income in that state with the cost of living. And if you have a partner, you have to account for their job opportunities too.
A state with a higher cost of living may also have better job opportunities than where you live now, negating the higher costs. But it might not. Conversely, a state with lower cost of living may have limited job opportunities. And any amount of savings is moot if you can’t find work.
Note that some job markets and professions may be more advantageous to others. For example, if you’re contemplating moving to Kansas and plan to work in agriculture, you’ll probably be fine. But if you need more job diversity, Maryland or Ohio are better bets.
Of course, you can live anywhere if you’re a remote worker or self-employed. In that case, focusing on the lowest cost of living and greatest payoff benefit makes the most sense.
Few people consider how much taxes can affect the cost of living. Some states have high income taxes, while other states have no income taxes at all.
If you move to a state with high taxes, that could quickly negate a higher salary. But you have to consider more than just income tax rates. First, high income taxes may be a bigger burden if you have a high income to go along with it. Find out what the tax rate is in your bracket.
Also note that states without income taxes still need tax revenue. That means low- and no-income-tax states may have higher property and sales taxes. Plus, some municipalities may also have taxes. For example, a county might add a certain percentage to the sales tax for their own coffers.
And if you plan to live there for the long haul, note that taxes exist to pay for things. Moving to a low-tax state sounds great until you find out they don’t have all the niceties (or even minimum standards) you were used to back home.
All states have to make choices about how they spend government funds, including on government agencies and programs like the DMV and Medicare. Does the state you want to move to make choices you can live with?
Length of Stay
Most new-resident repayment programs require you to either live in the area or buy a house and keep it (while living in it) for at least three years. After all, the whole point is to attract new residents to the area.
That’s generally good home-buying advice anyway. To get the most out of your home investment, you must hang onto your house for at least five years or until the value outpaces the closing costs. Otherwise, selling your house will end up costing you money.
And the whole point is to get rid of debt, not take on more. So if you’re not committed to living in the area for a while, the benefit probably isn’t worth it.
Getting a feel for a place before you move there is essential for knowing if you’ll fit in and enjoy living there. Even if a repayment program would save you significant money, money isn’t everything. And being miserable probably isn’t worth the savings.
So if you’re the kind of person who loves a big city’s hustle and bustle, moving to a rural area in Kansas or Maine likely isn’t for you. On the other hand, if you prefer the quiet, it’s perfect.
Also, remember that many things contribute to the culture of a place, including the nature of the people, the population density, and the activities available. Every state in the U.S. has its own feel. And though we’re all Americans, people have culturally different attitudes and mannerisms across the country.
Moving to a rural area (and even some cities) will be a challenge if you’re used to reliable public transportation. If you don’t already own a car, you must buy one. And that’s an extra expense that will cut into any student loan repayment benefit.
If you’re considering a move to a state without a new-resident repayment option, keep an eye on the state’s loan repayment assistance programs, which you can usually find by visiting the state’s higher-education department website.
If you’re unable to relocate and don’t live somewhere with a state-based forgiveness program you qualify for, don’t despair. There are still plenty of ways to pay off your student loans faster, including employer repayment assistance.