Americans owe more than $1.6 trillion in federal student debt, and the average graduate leaves college owing $29,400. Fortunately, your state may be able to help. There are a number of states that pay off student loans through student loan repayment assistance programs. Some of these plans are meant to entice people to move to the state, while others are available to residents who work in certain professions. If you can qualify for one of these programs, you could get a major chunk of your student loan debt repaid for you.
Overview of State Loan Repayment Programs
State loan repayment programs (LRAPs) offer student loan assistance to eligible borrowers who are paying back student loans. Some programs act as an incentive to encourage people to move into certain areas or become homeowners in the state. Others are available to residents who work in a certain field, such as health care or law.
Unlike federal loan forgiveness programs, which only forgive federal student loans, some states that pay off student loans through LRAPs will help you repay both private and federal student loan debt. However, like most other student loan repayment options, there are stipulations. For instance, you may have to commit several years to living or working in an area in order to receive the maximum benefits.
State-by-State Loan Repayment Assistance
Here are some of the states offering repayment assistance to qualifying student loan borrowers, which could help you pay off student loans early. This list is not exhaustive, so check with your state to find out if it offers LRAP opportunities.
California
The California State Loan Repayment Program offers assistance to primary care physicians, dentists, dental hygienists, physician assistants, nurse practitioners, certified nurse midwives, pharmacists, and mental/behavioral health providers who practice in designated California Health Professional Shortage Areas. Award amounts can equal $100,000 or more, depending on whether you work full-time or half-time and how many years you serve.
Kansas
Kansas offers up to $15,000 in student loan assistance over five years to new residents who move to one of its Rural Opportunity Zones (ROZ). You must have a newly established permanent residence in an eligible ROZ and live there for the five years of repayment to qualify for the full amount.
Maine
Maine offers several perks for student loan borrowers, including three LRAPs and a tax credit:
• Maine Dental Education Loan Repayment Program: This program offers repayment assistance up to $100,000 to dentists and dental health professionals working in underserved areas.
• Maine Health Care Provider Loan Repayment Pilot Program: Designated for health care providers who live and work in Maine for at least three years, this program offers up to $75,000.
• Nursing Education Loan Repayment Program: Established and new Maine residents who work as registered nurses or nurse educators for at least three years are eligible to receive up to $40,000 through this program.
• Student Loan Repayment Tax Credit: Student loan borrowers who earned at least $12,917 in Maine could claim a student loan tax credit up to $2,500 annually with a lifetime limit of $25,000.
Recommended: How to Get the Student Loan Interest Deduction
Maryland
Maryland has a SmartBuy 3.0 program to help student loan borrowers become homeowners. To qualify for this program, you must owe at least $1,000 in student loans, purchase a home that meets the Maryland Mortgage Program guidelines, and borrow a mortgage from an approved Maryland SmartBuy lender. The program can provide up to 15% of the home purchase price (for a maximum of $20,000) for you to use to pay off your student loans.
Massachusetts
Health care providers in Massachusetts could receive as much as $50,000 in student loan repayment in exchange for working two years in an underserved community. You’ll need to be licensed to work as a primary care physician, dentist, physician assistant, clinical social worker, marriage and family therapist, or other qualifying health care profession.
Michigan
Michigan’s State Loan Repayment Program offers up to $300,000 in student loan assistance to health care providers who work in a designated shortage area. You must commit to a service term of at least two years to qualify for this program.
Ohio
The city of Hamilton in Ohio has a program to incentivize new residents to move to the area. The Hamilton Talent Attraction Program Scholarship offers up to $15,000 to borrowers who move to an area in the Hamilton city limits. It prefers graduates with a degree in science, technology, engineering, arts or mathematics.
Texas
The Texas Student Loan Repayment Assistance Program offers up to $6,000 per year to attorneys paying back student loans who work for a Texas legal aid program that’s receiving a grant from the Texas Access to Justice Foundation (TAJF). You also must have been licensed to practice law for fewer than 10 years and make no more than $80,000 per year.
Requirements and Eligibility
The requirements for state-provided LRAPs vary by program. Some are open to current residents, while others offer benefits to new residents who move to or buy a home in a certain area.
Programs that are designated for specific professionals often require you to work in a designated shortage area or with an underserved community. You’ll also generally need to commit to a certain service term, such as two or three years. Read over the fine print of a program’s requirements to see if it could be a good match for you.
If you can’t find a program that fits your specific situation, there are other ways to make it easier to repay your student loans. For instance, you might consolidate all your loans into one loan or refinance your student loans, ideally for a lower interest rate or better loan terms if you qualify. (Just be aware that refinancing federal student loans makes them ineligible for federal programs and protections like income-driven repayment.)
Application Process and Deadlines
The application process and deadlines also vary by loan repayment assistance program, and you can usually find this information on the official state or program website. You may need to fill out an application with details about your educational background and student loan debt. Often, a program requires you to commit to working half-time or full-time for a certain number of years.
These programs can be competitive, so make sure to get your application in well ahead of the stated deadline. Some programs also pay out a certain amount per month or year, so find out whether you need to submit additional applications to maintain your eligibility.
Loan Repayment vs Loan Forgiveness
Both loan repayment assistance programs and student loan forgiveness programs can help you pay off your education debt. However, loan repayment programs may offer assistance sooner, as some of these programs only require two or three years of service.
By contrast, the Teacher Loan Forgiveness program requires five years of service, while Public Service Loan Forgiveness requires 10. And income-based student loan repayment forgiveness requires 20 or 25 years of payments until your balance may be forgiven.
Loan repayment programs might also help you pay off both private and federal student loans, whereas only federal student loans are eligible for loan forgiveness programs.
Finally, loan repayment and loan forgiveness programs may have different tax implications. The loan forgiveness you get from PSLF is not taxable, for instance, whereas assistance you get from an LRAP could be treated as taxable income.
The Takeaway
When it comes to paying back your student loans, your state may be able to help. Several states offer loan repayment assistance programs to eligible borrowers who move to a certain area or work in a qualifying profession. By taking advantage of one of these programs, you may be able to get a major portion of your student loans paid off.
Even if your state doesn’t offer an LRAP, there are other ways to potentially make your payments easier, including student loan forgiveness, loan consolidation, and student loan refinancing for more favorable rates and terms for those who qualify. Carefully consider all your options for repaying student loan debt.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
What types of loans qualify for state repayment assistance?
State repayment assistance programs generally pay off federal student loans, and some will pay off private student loans as well. Check with each individual program to find out what types of loans qualify for repayment assistance.
Can you receive assistance from multiple state programs?
You may be able to receive assistance from multiple state programs — if, for instance, you live in one state and get assistance and then move to another state and get assistance there — but you likely can’t do this simultaneously. Most programs require you to live and work in-state to be eligible for student loan repayment benefits.
How much student loan debt can state programs cover?
State programs can cover a significant portion of your student loan debt. The LRAP for health care workers in Massachusetts offers up to $50,000, while Michigan’s health care worker LRAP can provide up to $300,000. However, the amount will depend on the program and the field you work in.
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