If you’re one of the 45 million Americans with student loans, you might be looking for an out-of-the-box solution to your debt. Here’s one: Try moving someplace new to help pay off your student loans faster.
Of course, if you love where you live, don’t let your student loans drive you away. But if you’re interested in relocating anyway, moving could be a savvy choice for your finances.
From lowering your cost of living to qualifying for student loan assistance, here are four surprising ways moving could help you conquer your student debt.
1. You could seriously lower your cost of living
A number of factors affect how much you spend each month, from your lifestyle to your recurring bills. And one such major influence is where you live.
Consider the cost-of-living difference between New York City and Austin, Texas, for example. Both are cool cities with lots to do, but consumer prices, including rent, in Austin are nearly 40% lower than in New York. Choosing to live in Austin instead could create a ton of room in your budget.
Moving could also save you a lot in rent each month. According to ApartmentList, San Francisco, New York City and Boston have some of the highest rent prices in the country. The median costs of a one-bedroom apartment are $2,459, $2,118, and $1,687, respectively.
But if you packed your bags and moved to Memphis, Tenn., you’d face a median rent of just $700 for a one-bedroom. In Chicago, that number rises to $1,076, and in Miami it’s $1,082. Changing cities could easily cut your monthly rent in half.
This strategy of reducing rent is what helped Logan Allec, now a Certified Public Accountant, pay off more than $35,000 in student loans. Allec also owns and runs the personal finance site Money Done Right,
“For a few months out of college, I rented out a room in a nice area for nearly $1,000 per month,” said Allec. “[Then] an opportunity arose for me to share a room in a house.”
His rent decreased from $1,000 down to $275, allowing Allec to put hundreds of extra dollars toward his student loans each month and pay them off years early.
Of course, lowering your cost of living won’t save you money if you’re limiting your job prospects. You still need to make sure you have employment opportunities and can reach your income goals.
But if you choose a destination with a solid, well-paying labor market — or perhaps get a job that lets you work from anywhere — you could transform your cost of living. And with all that money you’re saving each month, you could throw additional payments at your student loans and be out of debt years ahead of schedule.
2. You could save thousands in a state with no income tax
Outside of reducing your living expenses, moving could also save you money on taxes. In the U.S., there are seven states that don’t charge state income tax:
- South Dakota
Similarly, New Hampshire and Tennessee don’t tax wages, though they do tax interest and dividends. According to a Student Loan Hero study, eliminating state income tax could potentially save the average borrower $1,977 per year.
If you used those savings to pay off your student loans, you’d chip away at your debt faster — and save even more money on interest. Note, however, some of these states have higher-than-average sales or property taxes that could offset some of the gains, so make sure you look into this before making any big decisions.
Changing states isn’t the only way to save on taxes, either. Chartered Financial Analyst and financial wellness expert Anna Yen chose to save money on taxes by moving to Hong Kong after graduating from the University of Pennsylvania.
“I chose to move out of the U.S. to Hong Kong three years out of graduation for higher income and to gain expat tax breaks,” said Yen. “The Foreign Earned Income Exclusion eliminates federal tax for the first $90,000 of income. This also eliminated state and city taxes, which I was originally paying in New York, some of the highest in the country.”
Thanks to her savings, Yen paid off $15,000 in student loans less than five years after graduating. If you’d like to move abroad, you might need to work for a foreign employer who can sponsor you for a visa. Or if you work online, you could adopt a digital nomad lifestyle, moving between countries when your visitor visa expires.
3. You could reduce your bills to $0 by leaving the country
If you’re interested in leaving the country like Yen did, there is another way to use your wanderlust to conquer student loans.
This approach works a little differently than the previous one, since it doesn’t involve you making extra payments on your loans. Instead, you could put your loans on an income-driven repayment plan, which would adjust your payments according to your income.
When making this calculation, the government looks at your tax returns and your Adjusted Gross Income (AGI). But if you’re living abroad, you can take advantage of the Foreign Earned Income Exclusion, which as Yen notes above, could exclude much of your income from taxes (as long as you meet eligibility requirements). Because of this tax perk, your AGI could be $0.
As a result, your payments on an income-driven plan could also be $0; you could pay nothing each month without running the risk of going into default. After 20 or 25 years, your entire loan balance could be forgiven. Your loans could be wiped away; you’d just be responsible for paying taxes on the forgiven amount.
This strategy really only works for expats who plan to live and work out of the country for two decades or more. If you return to the U.S., you’ll be facing a larger balance than when you started. It also only applies to federal student loans — private loans aren’t eligible.
Also be aware that there’s no guarantee that income-driven repayment plans won’t change or be eliminated in the future. So while this option is somewhat risky and probably not that common, it’s worth knowing about for anyone looking to live abroad long-term.
4. You could become eligible for student loan repayment assistance
Depending on where you live, along with some other criteria, you could be eligible for student loan repayment assistance from your state. Several states have student loan repayment assistance programs (LRAPs) for residents who work in certain fields.
If you’re a pharmacist in Arizona, for instance, you could earn up to $105,000 in loan assistance from the Arizona State Loan Repayment Program. STEM professionals who live and work in Maine could get up to $60,000 from the Alfond Leaders Program. Some jobs that commonly qualify for state-run LRAPs include lawyers, teachers, doctors, nurses, pharmacists, dentists and other healthcare professionals.
But you don’t necessarily need to work in a certain profession to get loan assistance. Kansas, for instance, offers up to $15,000 in loan assistance for five years to anyone who establishes residency in one of its rural opportunity zones. And Hamilton, Ohio, a city of about 62,000 residents, will provide up to $5,000 over 25 months to new residents through its Talent Attraction Program (TAP) Scholarship.
Most recently, programs from Vermont and Tulsa, Oklahoma, offer financial incentives to remote professionals willing to move and work there for at least a year. Both programs offer up to $10,000 in stipends, coworking space memberships and other perks to online workers.
Although this money isn’t specifically designated for student loans, you could choose to put it toward your debt. If you’re drowning in student loan debt, moving to a state that offers financial assistance could mean a lifeboat. Check out our database of LRAP opportunities for more information.
Get creative about crushing your student loan debt
No one enjoys the feeling of having student loans hanging over their head. Debt can become especially burdensome if it’s eating up a big portion of your paycheck every month and standing in the way of your other goals.
So it could be time to come up with creative solutions for getting rid of your student loans. Moving to a state with a lower cost of living or no income tax, for instance, could be the game changer you need to take back control of your finances.
Or you might take a page out of these borrowers’ books and start a side hustle to make extra payments on your student loans. One home baker, for example, earns over $1,000 per month with her fidget spinner cookies, for instance, and a PR professional teaches group fitness classes on the side to pay off his debt.
By thinking outside the box when it comes to making or saving money, you could change your financial situation and crush those student loans once and for all.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.