What states offer student debt relief programs for their residents?

There was much excitement after President Biden announced that his administration would cancel up to $20,000 in federal student loan debt. However, just about as soon as the program got running lawsuits challenging the president’s authority to do so put the plan on ice.

Now the over 40 million Americans that could benefit will have to wait for the Supreme Court to announce their verdict on the legality of the White House student loan forgiveness. Regardless, there are other federal programs that will wipe out all of a borrowers outstanding debt.

As well, 47 states, the District of Columbia and many cities have their own programs to provide student loan borrowers with relief. Five states in particular provide student loan debt relief to residents and those who are willing to move there. Here’s a look…

Kansas

Kansas has designated 95 counties as a Rural Opportunity Zone (ROZ) where those who established a new permanent address can receive student loan repayment assistance of up to $15,000 or an income tax waivers for up to five years. Enrollment to apply is currently open until 30 September 2023. Applicants must have an associate’s, bachelor’s or post-graduate degree prior to moving to the participating county as well as an active student loan balance in their name.

Maine

Maine offers student loan payment reimbursement through the Student Loan Repayment Tax Credit (SLRTC) to residents who meet certain requirements. Those eligible could claim up to $2,500 annually, and $25,000 in total, per taxpayer meaning that both spouses could qualify. This program replaced the Educational Opportunity Tax Credit (EOTC) as of 1 January 2022.

Whereas the EOTC had stricter limits on when and where a degree was attained, now those who obtained an associate, bachelor’s, or graduate degree after 2007 from an accredited Maine or non-Maine community college, college, or university may be eligible to claim the credit.

Other requirements include living in Maine and filing a Maine individual income tax return. Also having earned income during the prior tax year equal to the state minimum wage multiplied by 936 hours. The amount is $11,934 for tax years beginning in 2022.

Maryland

Those with student loan debt who purchase a home in Maryland may be able to take advantage of the state’s SmartBuy 3.0 program. In order to participate, borrowers must have at least $1,000 in student debt and can have up to 15 percent of the home purchase price, capped at $50,000, of their student loan forgiven.

Among the other requirements, the full student debt of at least one borrower must be paid in full by the time of the home purchase. Borrowers must go through an approved Maryland SmartBuy lender and qualify for the Maryland Mortgage program. For more information check out the SmartBuy 3.0 fact sheet.

Michigan

In a effort to help employers recruit and retain needed healthcare professionals in Health Professional Shortage Areas, Michigan will provide loan repayment to those who enter into service obligations. The Michigan State Loan Repayment Program (MSLRP) will give those eligible up to $300,000 in tax-free student loan repayment assistance. You must participate in the program for at least two years to qualify for the full repayment assistance amount. To learn more about the requirements the Michigan Health & Human Services provides a fact sheet.