Best Places to Pay Off Student Debt By State
If you’re willing to move to a new state, you could get help repaying your student loans. Here are the top places to pay off student debt by state.
5 best places to pay off student debt by state
Based on our criteria, which included availability of repayment assistance programs and tax incentives (see the full methodology below), here are the five states we chose.
1. Kansas
Moving to the Sunflower State can help you pay off a big chunk of your student loans. If you move to a designated Rural Opportunity Zone, you’ll get up to $15,000 over five years to repay your loans. And the state will waive your income taxes for up to five years.
Depending on your income, family size and tax bracket, the state income tax waiver can help you save a significant amount of money. For example, if you’re single and make $50,000 a year, you’d pay $2,093 each year in state taxes. By having them waived, you’d save over $10,000 over five years. You could use that money to pay down your student loan debt even further, or set it aside for a down payment on a home.
To qualify for the program:
- You must have moved to one of the designated counties after July 1, 2011, or after the date that county opted into the student loan program
- You must have received an associate, bachelor’s or master’s degree before moving to the area
- Your student loan balance must be in your own name
- You must provide proof of residency at both your previous and current address, along with your student loan statements
- You need a county or employer sponsor to qualify for funding
By moving to Kansas, your money may go further. According to BestPlaces, which analyzes data about people and places, the state’s cost of living is 16.9% lower than the rest of the U.S.
For more information, contact the Kansas Department of Commerce.
2. Texas
Living in Texas may be a good idea if you’re a teacher, lawyer or health care provider. Here is information on the state’s eight loan repayment assistance programs:
- Loan Repayment Program for Mental Health Professionals: If you work in an eligible specialty in a Mental Health Professional Shortage Area, you could get up to $160,000 in loan repayment assistance.
- Math and Science Scholars Loan Repayment Program: Qualified math and science teachers who agree to serve for at least four years in a Title I public school can receive up to $5,000 a year in student loan repayment assistance.
- Nursing Faculty Loan Repayment Assistance Program: If you have a master’s or doctoral degree in nursing and work as a faculty member in a nursing program at a qualifying school, you can receive up to $7,000 a year to repay your student loans. You can receive funds for up to five years.
- Physician Education Loan Repayment Program: Physicians who practice in the state — especially primary care physicians who work in shortage areas — can qualify for up to $180,000 in loan repayment assistance.
- Rural Communities Health Care Investment Program: Health clinicians who work in low-income areas can receive up to $10,000 to repay their student loans.
- Teach for Texas Loan Repayment Assistance Program: Teachers who work full time in shortage areas are eligible for up to $2,500 in loan repayment assistance. Teachers can receive the award for up to five years.
- Texas Student Loan Repayment Assistance Program: Lawyers who work in legal aid helping low-income residents can receive up to $4,800 a year in loan repayment assistance.
While some cities in Texas can be expensive, the state — overall — is relatively affordable. Its cost of living, according to BestPlaces, is 6.1% less than the rest of the U.S.
3. Maryland
If you have student loans and want to become a homeowner, Maryland may be the best state for you. Maryland offers the SmartBuy program, an initiative that helps people with debt buy homes.
Through SmartBuy, your debt is paid off during the purchase of a home through the Maryland Mortgage Program. It provides financing up to 15% of the home purchase price to repay your student loans, up to a maximum of $40,000. For more information, contact the Department of Housing and Community Development.
While becoming a homeowner in Maryland can help you pay off your debt, be aware that the state has a higher-than-average cost of living.
4. Maine
Through the Opportunity Maine Tax Credit, state residents with an associate or bachelor’s degree can get reimbursed for student loan payments they made throughout the year.
If you have an associate degree, or if your bachelor’s degree was in science, technology, engineering or math (STEM), the tax credit is refundable. That means if your tax bill is less than the tax credit, you’ll receive a check for the remainder.
To put that in perspective:
- Let’s say you paid $2,500 toward your student loans and had a $2,000 tax bill
- Through the tax credit, the $2,000 tax bill would be covered, and you’d get a check for the remaining $500
The tax credit isn’t refundable for non-STEM bachelor’s degree holders. For bachelor’s degrees that aren’t in STEM and for all graduate degrees, you can use the remaining balance toward the tax bills for the next 10 tax years.
The maximum value of the tax credit is $377 a month. If your monthly payments were $400, that means your tax credit would be worth $4,524 ($377 x 12). For more information, contact Opportunity Maine.
Maine’s cost of living is slightly lower than the national average, so your salary may feel higher if you relocate.
5. Iowa
If you’re a teacher or health care provider, you may want to consider relocating to Iowa, which — like Texas — is facing shortages of trained professionals in several high-need areas.
It offers four student loan repayment programs, with up to $200,000 in possible loan assistance:
- Health Care Loan Repayment Program: Health care providers, such as physician assistants, registered nurse practitioners and registered nurses, with federal student loans can qualify for up to $6,000 in annual loan repayment assistance. In return, participants must serve in a high-need area for five consecutive years.
- Health Professional Recruitment Program: Eligible doctors, physician assistants, physical therapists and podiatrists who make service commitments to practice in high-need areas will receive up to $12,500 per 12-month commitment. Participants can receive the award up to four times for a total of $50,000 in loan repayment assistance.
- Rural Iowa Primary Care Loan Repayment Program: Doctors who work in certain cities with populations below 26,000 people can qualify for up to $40,000 in loan repayment assistance in exchange for a 12-month service commitment. Eligible participants can take part in the program for up to five years, giving them up to $200,000 to repay their student loans.
- Teach Iowa Scholar Program: Highly qualified teachers who work in schools in shortage areas can receive up to $4,000 a year, for up to five years, to repay their student loans.
Moving to Iowa could have some other benefits, too. The cost of living is much lower than the national average. In fact, the median price for a home is $141,200, according to BestPlaces.
What to consider before you make your move
Before you start packing your bags to move across the country, there are some benefits and drawbacks to relocating.
- Cost of living: If a state offers student loan forgiveness, compare its cost of living to where you live now. If the state is more expensive overall, it may negate the benefit you’d receive from the loan program. However, in some cases, moving can help you save money. For example, consumer prices in Austin are about 40% lower than they are in New York, so your money can stretch much further.
- Employment: Take into consideration what employment opportunities are available. For example, Kansas has a tempting offer if you move into a Rural Opportunity Zone. While it may help you pay off your loans, you may have trouble finding work in your field in such a remote area. On the other hand, it could be a great opportunity for those who are self-employed or who work remotely.
- Culture: Keep in mind the culture and activities that would be available in your new home. If you’re going from a busy city such as New York or Austin and moving to rural Iowa, you might be in for some culture shock, with fewer options for entertainment, dining and socializing. But if you’re sick of the hustle and bustle and long for fresh air and a plot of land to call your own, relocating to a more remote area may be perfect for you.
- Taxes: If you move to a state with higher taxes, the value of the student loan benefits is reduced. Make sure you compare the tax rate of the new state to your current one before making a decision.
- Transportation: If you’re used to having a reliable public transportation network, moving to a more rural area can be difficult. You’ll need to buy a car, which is an added expense that can cut into the benefits of the student loan repayment perks.
- Other options: Moving to a new state isn’t the only way to get relief from your student loans. Your state may have its own student loan repayment assistance program, or you may qualify for a federal program such as Public Service Loan Forgiveness.
The feeling of having student loan debt hanging over you can be overwhelming. You can end up spending a big chunk of your paycheck each month toward your loans, making it feel like you’ll never get ahead.
Moving to a new state may sound drastic, but it can be an effective way to manage your debt. When combined with a lower cost of living or a better job opportunity, the best places for student debt by state offer valuable incentives that can make a big impact.
Methodology
To find the best places to live in to repay your student loans, we considered several factors, weighted equally:
- Availability of repayment assistance programs: Some states have robust repayment assistance programs in place to recruit people in certain professions. If eligible, you could have some or all of your loans paid off for you.
- Tax incentives: Several states offer tax incentives that can help you save a significant amount of money, which you can then use to repay your loans.
- Unique programs: To attract top talent, some states offer unique programs that help you pay off your student loans and become a homeowner.
- Cost of living: Moving to a place that is more affordable than the national average is a great way to free up extra cash to put toward your debt payments.