U.S States That Will Repay Student Loans for a New Home

What is Called Student Loan Debt Relief?

Student loan debt relief refers to services provided by private companies to help borrowers manage their student loan repayment. These companies often charge fees for services that federal loan servicers offer for free. Student loan forgiveness, on the other hand, releases borrowers from the obligation to repay part or all of their federal student loan debt, typically available for specific loans and limited to certain professions, such as public service, education, or the military.

It's essential to note that President Biden introduced a new income-driven repayment (IDR) plan called SAVE on June 30, 2023, following a Supreme Court decision. This plan enhances financial benefits for student loan borrowers, with key features launching in the summer of 2023, and full regulations taking effect on July 1, 2024.

Read More >> Who Qualifies For Student Loan Debt Relief?

U.S States That Will Repay Student Loans for a New Home

Several states offer programs to repay student loans for individuals purchasing a new home. While student loans often pose a barrier to homeownership, some states provide assistance programs to attract new residents. In these states, having a degree allows individuals to apply for student loan forgiveness programs as part of initiatives to ease the burden of student debt. Notable examples include Kansas, Maryland, and Maine.

Kansas

In Kansas, the state offers a student loan forgiveness program for individuals with a college degree who relocate to specific designated areas known as "Rural Opportunity Zones."

Those moving to one of the 90 specified counties within these zones may receive assistance with repaying their student loans. Participants in the program are also eligible for a 100% state income tax credit. Administered by the Kansas Office of Rural Prosperity, this initiative can provide up to $15,000 in loan forgiveness.

Maryland

In Maryland, the Smartbuy 3.0 program aims to support student loan borrowers in their pursuit of homeownership. Qualified participants may receive assistance of up to $40,000 or 15% of the home purchase price.

To be eligible, individuals must have a minimum of $1,000 in student loan debt, possess a college degree, and maintain a maximum household income of $92,500 (or $154,420 for joint filers). The home purchase must be made through an approved lender to qualify for this program.

Maine 

In Maine, the Maine Finance Authority administers a student debt relief program providing financial assistance to graduates. Eligible applicants may receive a refundable tax credit of $2,500 per year or a lifetime total of up to $25,000 for their student loan payments.

To qualify, individuals must have obtained their degree (associate, bachelor, or graduate) after 2007 from an accredited institution worldwide. Additionally, they should have been a Maine resident during a tax year in which they earned an income of at least $11,934.

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How Much is the Share of Student Loan Relief?

Earlier this year, the Supreme Court rejected President Biden's proposal to forgive up to $10,000 in federal loans per borrower (or up to $20,000 for Pell Grant recipients), which would have eliminated approximately $441 billion in student debt. In response to this decision, the Department of Education introduced the Saving on a Valuable Education (SAVE) plan, aiming to halve or reduce to zero monthly student loan payments for those with low income.

This adjustment has the potential to collectively forgive up to $39 billion in federal student loan debt, providing significant annual savings of at least $1,000 for borrowers. For instance, individuals earning $32,800 per year or less (approximately $15 an hour) could see their monthly loan payment reduced to $0 under this plan.

Scholaroo reports that Georgia, Maryland, and Louisiana are anticipated to offer the highest average federal student debt forgiveness, averaging over $54,000 per borrower. The top 10 states projected to provide the most significant student loan forgiveness per borrower

What is the Impact of Student Loans Debt Relief?

The end of the student loan forbearance program is anticipated to have various financial repercussions. As reported by a survey conducted, 28% of borrowers express concerns that resuming student loan payments could lead them to take on additional debt, impacting their monthly budgets.

Despite 45% of respondents managing to pay off other debts during the 41-month payment pause, 65% incurred new debts, ranging from credit card balances to unexpected medical expenses. Looking ahead, 61% believe the conclusion of the forbearance program will have a significant or moderate negative impact on their finances, prompting adjustments and potential delays in major life plans and milestones.

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