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state student Loan assistance

Would You Move for Student Loan Assistance?

Student loan debt is a known roadblock on the path to adulthood. Two-thirds of college graduates have student loan debt, and the average amount is $28,650, according to The Institute for College Access and Success.

As college graduates enter the workforce saddled with student loan debt, some states are expanding and debuting student loan forgiveness programs to soften the economic blow—while also hoping to incentivize newly-minted grads to set up roots and play a part in growing that economy.

Career Specific Student Loan Forgiveness

Student loan forgiveness is popular in fields with high barriers to entry due to the cost of their required advanced degrees, such as medicine or law. Student loan forgiveness is becoming more common for those who have majored in STEM subjects—with states including North Dakota and Rhode Island offering loan forgiveness.

In some states, student loan forgiveness is available for specific industries beyond these common fields. Veterinarians, for instance, can tap into a host of loan repayment programs around the country. The New York State Young Farmer Loan Forgiveness Incentive Program provides up to $10,000 a year, for up to five years, to recent graduates operating a farm—but the funding is competitive, with only 10 farmers chosen to receive it.

Of course, student loan forgiveness is subject to lawmakers’ funding decisions and tends to be funded in multi-year increments. That means a job chosen for student loan forgiveness today might lose some of its appeal in a year where state politicians show a change of heart.

In Texas, special funding for speech pathologists and audiologists was available but is now on hold. Additionally, Pennsylvania didn’t re-up a past loan forgiveness programs for its young farmers, according to the National Young Farmers’ Coalition.

Or Just Move to Maine

In 2018, Maine debuted The Opportunity Maine Tax Credit for those who graduated from college in or since 2008 and are Maine residents or were Maine residents while attending school. The tax credit offsets state taxes owed to Maine—and if the amount of your credit surpasses state taxes owed, you may either apply the overage to your tax bill over the coming decade or, if your profession is considered STEM-related, keep the money as a refund.

Maine has the highest average age of citizens of any state in the US, so incentivizing more educated and young individuals to stay or move in is a key move for the state’s economy. Neighboring states like New Hampshire and Vermont might want to follow suit, as they are the second and third in regards to the average age of citizen.

More student loan forgiveness programs could be on the way. Educators and policy observers elsewhere have noted that student loan forgiveness may be an effective tool to retain newly-minted grads, spur entrepreneurship, and rejuvenate aging workforces. An Alaska educator writing in the Juneau newspaper recently advocated for such a program in his home state, noting that in addition to benefiting recent college grads that this sort of incentive is necessary to promote state economic development.

In other states, student loan forgiveness is available to those who live in specific geographic areas. In Kansas, rural opportunity zone funding provides recent grads with up to $3000 per year (not to exceed $15,000 over five years) in loan forgiveness if they agree to live within 77 rural counties in the state.

Home Buying Perks for Student Loan Bearers

Many states offer recent graduates indirect student loan relief through home buying assistance initiatives that take into account recent grads’ student loans or let recent grads use home equity as a means to refinance or reduce educational loans.

Maryland’s Smartbuy program permits college graduates to roll student loan debt (of at least $1000) into a 0% interest second mortgage on a home they have purchased, and 20% of this balance is forgiven each year for five years.

Ohio’s Grants for Grads program, available to those who have graduated from college within the past 48 months, provides young adults with lowered mortgage interest rates and a down payment grant of up to 5% of a home’s purchase price—although loan applicants must maintain minimum credit scores and meet debt-to-income ratios which could be influenced by student debt. Indiana, South Dakota, and many other states offer home buying assistance to college grads.

The National Association of Realtors cautions that these programs may come with caveats, including geographic restrictions that only apply in regions where graduates may not find desirable jobs. As new homeowners are typically advised to stay in their homes for at least five years to build a healthy amount of home equity, moving to an area with a suppressed or single-employer or single-industry economy might not ultimately be a wise move if a business contraction happens.

Time to Start Packing?

Many young adults flock to dense metro areas to partake in or vicariously absorb the brain trust of different fields. Software coders flock to Silicon Valley or Seattle, while media and advertising mavens rush to New York City, and policy wonks descend on metro Washington DC.

But when they’re packing a heavy trunk of student loan debt along with the diploma, it’s worth considering a career launch that comes with a side perk of student loan assistance—and if you get settled in where you attended college, too comfortable to leave, is that such a bad thing?

New grads will need to crunch the numbers to decide if the potential for higher earnings in a far-flung city outweighs the benefits of working in their current area with student loan assistance programs.

One thing’s for certain: Student loan debt isn’t disappearing and is a fact of younger earners’ lives, and more states are addressing it as they create policies to attract and retain the workforce of tomorrow.

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.