4 Surprising Ways Moving Could Help You Pay Off Your Student Loans

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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 6 lenders of 2019!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:

    Fixed rates from 3.890% APR to 8.074% APR (with AutoPay). Variable rates from 2.540% APR to 7.115% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.540% APR assumes current 1 month LIBOR rate of 2.49% plus 0.04% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. SoFi rate ranges are current as of March 20, 2019 and are subject to change without notice.

  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Earnest.

Earnest Disclosures

To 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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 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 0318/2019. 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 ourstudent 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.


3 Important Disclosures for Laurel Road.

Laurel Road Disclosures

FIXED APR
Fixed rate options consist of a range from 3.75% per year to 5.80% per year for a 5-year term, 5.14% per year to 6.25% per year for a 7-year term, 5.24% per year to 6.65% per year for a 10-year term, 5.30% per year to 7.05% per year for a 15-year term, or 5.61% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The monthly payment for a sample $10,000 loan at a range of 3.75% per year to 5.80% per year for a 5-year term would be from $183.04 to $192.40. The monthly payment for a sample $10,000 loan at a range of 5.14% per year to 6.25% per year for a 7-year term would be from $142.00 to $147.29. The monthly payment for a sample $10,000 loan at a range of 5.24% per year to 6.65% per year for a 10-year term would be from $107.24 to $114.31. The monthly payment for a sample $10,000 loan at a range of 5.30% per year to 7.05% per year for a 15-year term would be from $80.65 to $90.16. The monthly payment for a sample $10,000 loan at a range of 5.61% per year to 7.27% per year for a 20-year term would be from $69.41 to $79.16.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.

VARIABLE APR
Variable rate options consist of a range from 3.48% per year to 6.30% per year for a 5-year term, 4.85% per year to 6.35% per year for a 7-year term, 4.90% per year to 6.40% per year for a 10-year term, 5.15% per year to 6.65% per year for a 15-year term, or 5.40% per year to 6.90% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.48% per year to 6.30% per year for a 5-year term would be from $181.83 to $194.73. The monthly payment for a sample $10,000 loan at a range of 4.85% per year to 6.35% per year for a 7-year term would be from $140.64 to $147.77. The monthly payment for a sample $10,000 loan at a range of 4.90% per year to 6.40% per year for a 10-year term would be from $105.58 to $113.04. The monthly payment for a sample $10,000 loan at a range of 5.15% per year to 6.65% per year for a 15-year term would be from $79.86 to $87.94. The monthly payment for a sample $10,000 loan at a range of 5.40% per year to 6.90% per year for a 20-year term would be from $68.23 to $76.93.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.


4 Important Disclosures for LendKey.

LendKey Disclosures

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.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered 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 2.5% effective February 10, 2019.


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of March 1, 2019, the one-month LIBOR rate is 2.48%. Variable interest rates range from 2.98%-9.72% (2.98%-9.72% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 3.89%-9.99% (3.89%-9.99% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. 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. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply. Borrowers whose loans were funded prior to reaching the age of majority may not be eligible for co-signer release. Note: co-signer release is not available on the Student Loan for Parents or Education Refinance Loan for Parents.

2.54% – 7.12%3Undergrad
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2.67% – 8.96%4Undergrad
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.