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:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
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 8 lenders of 2020!| Lender | Variable APR | Eligible Degrees | |
|---|---|---|---|
| Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Earnest. Earnest DisclosuresTo qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application. Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility. Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product. © 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America. 2 Important Disclosures for SoFi. SoFi Disclosures
3 Important Disclosures for Figure. Figure DisclosuresFigure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives. 4 Important Disclosures for College Ave. College Ave DisclosuresCollege Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. 1College Ave Refi Education loans are not currently available to residents of Maine. 2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation. 3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. 4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation. 5 Important Disclosures for Laurel Road. Laurel Road DisclosuresLaurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association. ANNUAL PERCENTAGE RATE (“APR”) FEE INFORMATION There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account. LOAN AMOUNT For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans. ELIGIBILITY & ELIGIBLE LOANS Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements). Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment. All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions. For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned. INTEREST RATES The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency. DISBURSEMENT OPTIONS The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired. POSTPONING OR REDUCING PAYMENTS After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends. We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment. If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments. KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. This information is current as of November 8, 2019 and is subject to change. 6 Important Disclosures for Splash Financial. Splash Financial DisclosuresTerms 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. 7 Important Disclosures for CommonBond. CommonBond DisclosuresOffered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 1.76% effective November 10, 2019. 8 Important Disclosures for LendKey. LendKey DisclosuresRefinancing 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 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay. |
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 | 1.99% – 6.89%1 | Undergrad & Graduate | |
 | 2.31% – 7.36%2 | Undergrad & Graduate | |
 | 2.06% – 6.81%3 | Undergrad & Graduate | |
 | 2.62% – 6.12%4 | Undergrad & Graduate | |
 | 1.99% – 6.65%5 | Undergrad & Graduate | |
 | 1.99% – 7.06%6 | Undergrad & Graduate | |
 | 1.85% – 6.13%7 | Undergrad & Graduate | |
 | 1.90% – 8.59%8 | Undergrad & Graduate | |
