Student Loan Forgiveness Programs

With over 45 million Americans in student loan debt, America truly faces a student debt crisis.  But many Americans don't realize that there are far more student loan forgiveness programs than those offered by the federal government.

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What is student loan debt forgiveness?

Student loan debt forgiveness programs come in federal, state, and private varieties, and are available to eligible college graduates as a way to make their student loan repayment a little easier.  Program offerings vary depending on who they are being offered by. 

 

For example, many state forgiveness programs are specifically designed to attract and retain graduates in certain fields and industries, and are intended to make working in an area more attractable.  Other programs are offered by employers themselves as a way to retain talent.

Federal student debt forgiveness

The most popular federal forgiveness programs at this time are:

But these programs have strict eligibility requirements and can be hard to apply for.  Luckily, there are other student loan forgiveness programs available to you, depending on the state in which you live.

Also, feel free to grab our free student loan calculator as you plan your debt-free journey.

Student loan forgiveness calculator

Student loan debt by state

No states in the United States have been spared from the student debt crisis, but it definitely has not impacted residents in all states equally.

Data from the Education Data Initiative helps us see the discrepancy that exists.  As of 2020, 19 states across the nation had borrowers with an average outstanding debt balance above $30,000, a staggering figure.  These 19 states were led by New Hampshire, with an average outstanding balance of $39,950.

Utah, on the other hand, has the lowest average student debt by borrower at $18,350.

Student loan forgiveness programs by state

The good news is that 48 out of 50 states across the United States (plus the District of Columbia) offer some sort of state-based student loan forgiveness program.  Across the country, there is an additional 130 state programs, in addition to the options that you have at the federal level.

Unfortunately, borrowers in North Dakota and Mississippi are out of luck, as they are the two states without a state-based program. 

Borrowers next-door in Minnesota, though, benefit from accessibility to fifteen different programs. 

 

Each state program is run a little differently, and they are often designed to attract and retain talent in certain fields, such as law, education, nursing, and healthcare.  But there is little consistency from state to state.  Generally, you'll want to pay attention to the following when considering a program.

  • What are the eligibility requirements?  Most of the state-run programs are based on the field in which you work, rather than the type of loans you have.  So right off the top, you'll have to meet those career and service eligibility requirements to receive any debt forgiveness.  Beyond these, though, you'll generally be expected to be a resident of the state, and you may be required to be a United States citizen.  Consider Illinois' Teacher Loan Repayment Program, which requires you to be a resident and have fulfilled a 5-year teaching obligation at a qualifying low-income elementary or secondary school.

  • When and how do you apply?  Unlike federal programs, which oftentimes have strict and overarching application processes in place for borrowers nationwide, state programs oftentimes don't.  The application and review process is likely to be slightly different with each program.  Some state loan forgiveness programs do have formal application processes and deadlines, while others entail emailing a contact about a rolling admission type of program.

Another thing to consider is the possibility of "double-dipping," of taking advantage of multiple programs at one time, if applicable.  State programs can be great for this, as you can get some immediate relief as you work towards a federal program like Public Service Loan Forgiveness over the long term.  You'll just need to review the criteria to make sure it is allowed.

Other states pay off your student loan for relocating there

An interesting development over the past few years has been that there are now certain states across the country that are willing to pay off part of your student loan balance just for relocating there.  At this time, there are four main programs that do this.  They are:

  1. Kansas' Rural Opportunity Zone Program

  2. Maine's Opportunity Maine Tax Credit

  3. Maryland's SmartBuy 3.0 Program

  4. Michigan's Loan Repayment Assistance Program (LRAP)

Kansas' Rural Opportunity Zone Program

In an attempt to increase economic development across heavily rural areas, Kansas has designated 95 counties statewide that qualify for this program.  Under its' guidelines, if you relocate to one of 95 counties and are a new resident to the area, you may qualify for repayment assistance of up to $15,000 over five years.

Maine's Opportunity Maine Tax Credit

Maine's Opportunity Tax Credit is available to full-time residents only.  If you meet that requirement, and meet the other program eligibility requirements, then the credit effectively functions as a student loan reimbursement program, which could earn you $4,000 in forgiveness, depending on your loan situation and other factors.

Maryland's SmartBuy 3.0 Program

This unique Maryland program is available to prospective homebuyers with at least $1,000 in student loan debt.  With a maximum benefit of $30,000, Maryland SmartBuy 3.0 allows homeowners to receive up to 15% of the home's value to clear their outstanding student loan balance.

At least one of the student loan borrowers buying the home must have all outstanding loans paid off by the time the home is purchased (through the SmartBuy benefit).

Michigan's Loan Repayment Assistance Program (LRAP)

The state of Michigan faces a shortage of qualified healthcare workers in certain areas of the state.  In an attempt to alleviate this, healthcare workers that agree to work for at least two years in a designated healthcare shortage area may be eligible to receive up to $200,000 in student loan assistance.

This is one of the most generous state-sponsored student loan programs in the entire country.