Several states and a few towns and counties offer student loan repayment assistance for borrowers willing to relocate. The financial incentives range from about $5,000 to $50,000 or more. Most programs require four or five years of residency to receive the maximum award.
None of these opportunities require the more traditional public service path to student loan forgiveness. But, several of them favor or restrict their eligibility to those with degrees useful to high tech companies.
Kansas has authorized 77 counties to offer state income tax waivers and student loan repayments of up to $15,000 for new residents. The enabling legislation expires after 2021, so a new law would need to be passed for benefits to continue through 2022 and beyond.
The program is designed to attract educated professionals living outside of Kansas. In order to receive state income tax credits, the individual must have lived outside of Kansas for five or more years before moving to one of the 77 eligible rural counties. They must also not have had more than $10,000 of income from Kansas sources in any of the five prior years. If these requirements are met, the new resident would not pay any Kansas state income tax through 2021. State income tax rates start at 3.1% and approach 6% for higher levels of taxable income.
All but two of the 77 counties in the program also offer a student loan repayment benefit. Eligible rural county residents may receive up to $3,000 per year to repay their student loans for a maximum of five years. Participants need an employer or county sponsor. The sponsor funds half of the student loan repayment benefit.
The state’s largest employers include Wichita-based aviation manufacturers Spirit Aerosystems and Cessna Aircraft, and Overland Park-based telecom giant Sprint. Their home counties are not in the program. However, those willing to commute may be able to find a suitable county in the surrounding area which does participate. The cost of living in Kansas is below the national average, even in the state’s most populous cities.
Maine offers residents annual state income tax credits up to the amount of their student loan repayments as long as they live and work in the state. There is a cap on the allowable tax credit each year based on the type of degree earned and the year of graduation. But, unlike most other state programs, there is no lifetime maximum tax benefit. If a borrower’s student loan repayments are at or below the stated cap, a resident potentially could have their entire student loan balance repaid by the state.
Residents may qualify for a tax credit with a bachelor’s or associate’s degree from any accredited college beginning in 2016. But, tax credits for payments made on graduate school student loans require an advanced degree from a college in Maine.
The tax credit is refundable for loan repayments on all associate’s degrees and bachelor’s degrees in a science, technology, engineering or mathematics program. Tax credits for all other student loan repayments are nonrefundable but may be carried forward for up to ten years.
The state also offers tax benefits to Maine employers that repay student loans on behalf of their employees. To the extent an employer makes the student loan repayments, residents will not qualify for a tax credit on their individual returns.
The state’s largest employer is MaineHealth. Other major employers include Bath Iron Works, a subsidiary of defense contractor General Dynamics, life insurer Unum, and The Jackson Laboratory, a biomedical research institution.
Maryland offers up to $40,000 of student loan repayment for first-time homebuyers that purchase one of its state-owned properties.
The Maryland SmartBuy program is open to homebuyers with a student loan balance of at least $1,000. Participants receive 15% of the purchase price of the home up to $40,000 to pay down their student loans. This award comes in the form of a second-mortgage loan on the property. The loan carries no interest or payments and is forgivable at 20% per year over five years.
To be eligible for SmartBuy, at least one borrower in the household must have their total student loan balance extinguished by the award. In addition, household income may not exceed certain limits which vary by county. The income limit ranges from $96,500 for a household of one or two up to $164,080 for a household of three or more at the time of this writing.
The size of the program is limited by the number of available home listings. Only a handful of homes may be for sale at a given time, and the prices of the homes are generally under $300,000.
However, most homes are within the densely populated Baltimore-Washington, D.C. area. Professionals may be better able to find employment in their field of expertise here than in similar programs elsewhere in the country. The cost of living in or near Maryland’s major metropolitan areas is well above the national average, primarily due to higher housing expenses.
St. Clair County, Michigan
St. Clair County, Michigan is located roughly 60 miles northeast of Detroit and borders Lake Huron. The Community Foundation of St. Clair County sponsors a reverse scholarship that awards recipients up to $15,000 to help repay student loan debt. Awards are made through a selective application process.
The program is intended to draw individuals that grew up in the county back home to start their own families, but prior residence is not explicitly required. To be eligible, applicants must have a 2-year or 4-year degree in a science, technology, engineering, arts or math discipline. They must have graduated within the past 10 years and not currently reside in St. Clair County.
Award recipients are expected to live and work in the area. However, there is no required length of stay. St. Clair County has a population of more than 160,000. Its largest employers are McLaren Port Huron hospital and the county’s schools. There are also several auto parts manufacturing facilities in the county. The cost of living is below the national average.
Recent graduates of a college or university located in New York State may be able to have up to $50,000 of their student loans repaid if they are willing to operate a farm for five years. Participants may receive up to $10,000 annually so long as they are farming full time within the state. No more than ten recipients may receive an award each year, and applicants must have received an undergraduate degree within the past two years to be eligible.
Workers in science, technology, engineering and mathematics related fields are eligible to receive up to $6,000 of awards for student loan repayment from North Dakota. Eligible award recipients must earn less than $60,000 per year, have had a college GPA of 2.5 or higher, and have been working in an occupation approved by North Dakota for at least twelve months (or on a nine-month teaching contract). Awards are capped at $1,500 each year and an application is required annually to remain eligible.
North Dakota has fewer than 800,000 residents, making it the fourth smallest state by population. Housing is less expensive than the national average, but transportation and healthcare costs tend to be higher. The largest employers in North Dakota are healthcare provider Sanford Health and the state’s universities.
Hamilton, Ohio offers new residents up to $5,000 for student loan repayment. The city is approximately 30 miles north of Cincinnati and has a population of over 60,000. Hamilton is the county seat of Butler County, Ohio.
Hamilton was founded in 1791 and has a downtown area that has been revitalized by several real estate projects. The Hamilton Community Foundation sponsors a reverse scholarship program aimed at attracting recent graduates to live in the city. Successful applicants receive $200 per month for up to 25 months so long as they live in designated areas of Hamilton and work in Butler County.
Preferred applicants will have graduated within the past 7 years from a science, technology, engineering, arts or mathematics program. The foundation also prefers applicants with a demonstrated desire to be involved in the community.
Butler County is home to several large employers. Miami University has campuses throughout the county, and AK Steel and insurer Cincinnati Financial Corporation are headquartered there. GE Aviation’s engineering team is also located within the county. The cost of living is below the national average in this part of Ohio.
Newburgh Heights, Ohio
Newburgh Heights, Ohio offers to give new home buyers in the village 50% of the amount of their student loans up to a maximum of $50,000. The town of about 2,000 people is located just 5 miles from downtown Cleveland.
To be eligible for student loan repayment assistance, new residents must purchase a home for at least $50,000 and have completed a bachelor’s degree or higher within the past five years.
This is not a program for short-term residents. The home buyer receives 80% of the eligible award after living in their home for ten years. The final 20% of the award is made after 15 years of home ownership. Someone that leaves Newburgh Heights before ten years of residence gets nothing.
The program is small. Only a handful of homes are likely to be available for sale at any time given the size of the village.
Newburgh Heights is part of the broader Cleveland economic area. The area is served by several industries, with healthcare and financial services among the biggest private sector employers. The Cleveland Clinic is the largest employer. KeyBank and auto insurer Progressive are headquartered in the area. The cost of living in the Cleveland metropolitan area is roughly in line with the national average.
Rhode Island offers to make your student loan payments for four years if you work in one of several occupational areas within the state. Eligible fields include life sciences, natural or environmental sciences, information technology, advanced mathematics, finance, engineering, industrial design or other commercial design, medicine, or medical device technology.
Successful applicants chosen by a committee receive refundable state income tax credits equal to their annual student loan payments subject to a limit. More than 200 people typically receive an award each year. The maximum credit is $6,000 with a master’s degree or higher, $4,000 with a bachelor’s degree, and $1,000 with an associate’s degree. So long as the recipient remains employed in an eligible field, they may receive an award for up to four years.
Rhode Island has many large employers, including Providence-based CVS Health and Citizen’s Bank. The cost of living is above the national average.
Weigh the Potential Costs and Benefits of Relocation
Student loan repayment assistance may make relocation attractive, but several other factors should be weighed before making a move. Job opportunities are likely to be more plentiful closer to urban areas. Potential salaries also need to be compared with the cost of living. Those contemplating a four to five year relocation before returning “home” should also consider how they would get back if and when the time comes.