States That Will Pay Off Your Student Loans
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Many states offer programs that help pay your student loan bill. To qualify, you may have to purchase a home or work in certain fields, like healthcare, education or law.
Some state-based programs require you to have a long-standing residency by spending a certain amount of time in the state before benefitting from assistance. Other programs welcome newcomers who moved from another location. However, you may still have to establish residency, which means you might have to do things like get a license or pay taxes in the state.
Here are some state-based repayment assistance programs to consider.
Program for homebuyers and new residents
Maryland
Maryland's SmartBuy 3.0 program offers student loan borrowers who owe between $1,000 and $20,000 the option to finance a home with a 3% downpayment and a 30-year conventional mortgage.
Individuals can then obtain a second loan — which is not a mortgage — at zero percent interest for up to 15% of the home's purchase price, capped at $20,000. This loan covers the individual’s student loan balance and does not require any monthly payments.
The state forgives 20% of the second loan each year for five years. If you sell the home before the loan is completely forgiven, you will need to repay the remaining balance.
For example, if the second 0-interest loan was for $20,000, and you sold the home in year three, you would owe $8,000.
Ohio
Ohio has two local-level programs that reward newcomers and potential homebuyers with student loan assistance.
If you've gotten a student loan to fund a bachelor's or other advanced degree in the last 10 years, you could be eligible for the Student Loan Assistance Grant Program in Newburgh Heights, a city near Cleveland.
Via grants, individuals can get 50% of their student loans repaid, up to a maximum of $50,000. To take advantage of the program, you must buy a home in Newburgh Heights for at least $50,000 and live there for 15 years.
At the 10-year mark, individuals will get 80% of their award amount. They’ll receive funds for the remaining balance at 15 years of residence.
If you're not ready to purchase a home but are still open to moving, consider Hamilton, Ohio, located almost an hour outside Cincinnati. Hamilton's Talent Attraction Program Scholarship provides up to $15,000 in loan assistance to those who move to a neighborhood within the Hamilton city limits and maintain full-time employment in Butler County or have a full-time remote role.
The $15,000 is split into $400 monthly payments, so individuals have to stay in the program for roughly three years to take full advantage of the benefit. Though not required, applicants who obtained a degree in a science, technology, engineering, arts or mathematics (STEAM) program in the last seven years are preferred.
Kansas
Moving to one of Kansas' 95 rural opportunity zones can get you up to $15,000 in student loan repayment assistance, paid over five years. The program is only offered to individuals new to the area, so applicants must prove previous permanent residency in another location. They must also show proof of current domicile in a Kansas rural opportunity zone.
Maine
Maine offers residents a Student Loan Repayment Tax Credit. This credit allows individuals to receive up to $2,500 annually and up to a max of $25,000 over a lifetime, which can go toward paying off their loan. Individuals must have earned a minimum annual income – $11,934 for the 2022 tax year – and gotten an associate, bachelor's or advanced degree from an accredited university after 2007.
They must also make required student loan payments to their lender or servicer throughout the year, as this loan tax credit acts more like a reimbursement for your payments.
Programs for healthcare workers
Most states have a student loan repayment assistance program for healthcare professionals, including those who work in mental healthcare. Some require you to work in a specific location within the state, often in underserved areas.
For example, Georgia and Idaho require recipients to work in rural communities. Other programs may offer support to healthcare workers in certain fields. Illinois provides student loan help to nurse educators, while North Carolina offers loan repayment benefits to mental health providers working with individuals in underserved locations.
Dentists can receive student loan assistance in some states. Delta Dental of South Dakota, a dental insurance provider, provides up to $125,000 in loan repayment over five years for new dentists licensed in the state who provide service to a certain percentage of Medicaid-insured patients. The program also provides $5,000 in bonus funding each year.
If you're a licensed medical professional, check your state's Department of Health website to see what student loan assistance or repayment options could be available.
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Options for lawyers and teachers
Depending on where you live or move to, if you're a teacher or lawyer, you might also have an opportunity to get loan repayment help.
Several states provide loan assistance to educators and individuals who practice law. Each program is different, but they share common requirements. For teachers, some programs may mandate that you are already a resident and teach in an area with a teacher shortage.
State programs offering student loan assistance for lawyers may have income caps. Indiana and New Mexico require individuals to have annual salaries of below $70,000 and $75,000, respectively.
Programs may also require applicants to work with low-income populations or at organizations focused on underserved communities. To learn about education and legal loan assistance programs, look to your school's financial aid office, state's higher education office or bar association website.
Weigh the pros and cons before moving for state student loan assistance
While state-based assistance can help you tackle student loan debt, it's crucial to weigh the pros and cons of each offering — especially if you’re considering relocating to access a specific program.
Before committing to a new state or student loan assistance program, always check the details and reach out to a point of contact to confirm requirements and get questions answered to help you make the best decision for you and your finances.
Also, make sure moving makes sense for your overall financial situation. Consider if the cost of living in your new location fits with your salary and any new financial obligations, like a monthly mortgage. For example, the Maryland Smartbuy 3.0 program may help you take care of your entire student loan bill, depending on the amount, but you have to ensure you can manage the new expense of a home purchase.
Additionally, consider whether the new location complements your lifestyle. Moving to a rural area may seem doable, but you should determine if it's something you can do for the length of time the program may require.
Don’t forget to check if there is already a program in your state that could assist, especially if you're in the healthcare, education or legal sectors.
