Small Towns Helping New Grads Pay Student Loans

by Emily Guy Birken · 4 comments

The 90s era television show Northern Exposure was based on a pretty ridiculous premise: Born and bred New Yorker Joel Fleischman moves to a tiny town in Alaska after finishing his medical degree because the town had paid for his schooling in exchange for his relocation there. That was the only way the small Alaskan community could get a doctor to settle there.

As it turns out, the fish-out-of-water comedy was ahead of its time. Several small towns in the United States are now offering recent grads a fantastic deal: as long as the new graduates maintain residency in the town or locality, a portion of their student loans will be paid by the community.

Mutually Beneficial

The communities making these offers have long been facing shrinking populations and the loss of young blood. Making the small towns and communities attractive to young graduates will help to revitalize the areas and inject new ideas into local businesses and professions.

One of the cities offering this unconventional revitalization plan is Niagara Falls, New York. According to Seth Piccirillo, the director of community development in Niagara Falls, the idea for this plan came from reading news headlines. He told ABC News, “College debt is at the forefront of so many stories you see now. The New York Times just reported that student debt has topped $1 trillion; 94 percent of students now have some amount of debt.”

With that national problem, Piccirillo realized there was a local solution for his town and for those graduates: offering debt relief for young professionals.

Who Qualifies?

In addition to Niagara Falls, Kansas also offers this sort of student debt relief in 50 of its counties, so that you could take your pick of small towns within those counties. In both cases, graduates will need to have an associate’s, bachelor’s, or graduate degree in order to qualify.

There is also a residency requirement, which asks that you rent an apartment or buy a house within a certain area of the particular town or county. In Niagara Falls, the town will offer recent grads $3,500 per year for up to two years starting with the class of 2013. Kansas is slightly more generous and offers up to $15,000 in student loan repayments over five years of residency and/or income tax waivers for up to five years.

The Question of Jobs

Unfortunately, these programs do not make any assurance of employment to graduates. Katie Smyser of Forbes reports, “graduates must also be wary of moving to a small town before securing work. Small towns mean smaller labor markets, and neither the community nor the individual would benefit if the move resulted in unemployment.”

Students who are amenable to moving to a small town should check out the availability of jobs in their field before applying for any of these debt-relief programs. The goal of these programs is to bring young people to a town who will be invested in that community. That is much more difficult without a job.

The Bottom Line

For new graduates, the opportunity to have part of your student debt paid off in exchange for relocation is a win-win. Graduates just need to be sure that they look before they leap.

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  • Kate says:

    Niagara Falls NY is a ghost town with a high crime rate. You couldn’t pay me to live there. (I live in Toronto, and spend a lot of time in Niagara Falls, Canada, which is a whole different ball game). I would suggest that the wise student would travel to the town and spend a couple of days there at least before even considering such a move.

  • Paul says:

    This is certainly an idea for recent grads with debt to consider. However, what if the state luring such recent grads has a high tax burden which they expect to be paid or to be paid eventually?

    Niagara Falls, which this article mentions, is offering $3,500 per year, but the state charges 6.45% for most income levels. So, someone earning $54,264 per year or more would be better off to pass up this deal in favor of a tax-free state. Recent grads can take what they save in not paying state income taxes and use it to pay off debt.

    States without an income tax are:
    •South Dakota

  • Shane says:

    That sounds like a fantastic idea. Great for the community and the lucky student who gets the grant. I can see why there might be an issue of unemployment but if they want you to move there and you are helping the community I think it would be easier to secure a job then not with the community backing.

  • Marbella says:

    Which small towns do not have mass university-educated and highly paid people in their cities and towns. A good investment for the future. Many will stay and many will start businesses and create more jobs, etc.

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