A new study by Student Loan Hero investigates how much student loan borrowers can save by moving to a state with no income tax.
New York, NY, April 11, 2017 — Student Loan Hero CEO Andrew Josuweit graduated from college with close to six figures in student loan debt. By the time he was able to begin paying them off, the balance had ballooned to $107,000. However, by moving from New York to Texas, he was able to save more than $15,000 a year in income taxes – which he used to aggressively pay off that debt.
Josuweit’s case may be an extreme one, but a new study by Student Loan Hero finds that the typical student loan borrower can save an average of $1,977 by relocating to a state with no income tax. By using these savings to make extra student loan payments, borrowers can cut several years and thousands of dollars off their repayment.
Student Loan Hero also surveyed student loan borrowers to find out how many are actually willing to move across state lines in order to save money for paying off student loans.
Despite the potential savings, 70 percent stated they would not be willing to move in order to realize these savings. Just 18 percent of survey respondents would move to a state with no income tax save money, while 12 percent stated they would move if it could save them $3,000 or more in state income tax.
“When you have a significant amount of debt to pay off, you have to make significant changes to your finances and lifestyle,” said Josuweit. “Student loan borrowers can skip their daily lattes and brown bag their lunches, but that’s probably not going to get them the fast results they are hoping for. In many cases, they have to consider drastic moves, such as relocating like I did.”
State Tax Savings Calculator
To help student loan borrowers determine whether relocating would be worth the savings, Student Loan Hero developed a one-of-a-kind State Tax Savings Calculator. By inputting basic tax and student loan information, users can estimate their effective tax rate, potential tax savings, and how those savings could help to pay down student loans faster by moving to another state.
The survey was conducted as a Google Consumer Survey, run from March 11-14, 2017. It collected answers from 1,018 respondents who have student loans. The largest margin of error present in any survey response was 3.1 percent.
The typical state income tax burden in each state was calculated using May 2016 BLS wage data and state tax data from the Federation of Tax Administrators and Tax-Brackets.org. Tax calculations assumed a single filer claiming one exemption and a standard deduction, according to the state’s tax laws.
Projected student loan savings assumed a borrower entering repayment on a 10-year standard repayment schedule. Calculations for undergraduate debt assumed a balance of $35,000 at the current Direct federal loan rate of 3.76%. For graduate debt, this study assumed a balance of $57,600 at the current Grad PLUS loan rate of 6.31%.
About Student Loan Hero
Student Loan Hero combines easy-to-use tools with financial education to help the millions of Americans living with student loan debt manage and pay off their loans. Student Loan Hero has helped more than 100,000 borrowers manage and eliminate over $2 billion in student loan debt since 2012 and assists over 3.5 million people in becoming more financially healthy every year.
Student Loan Hero offers both current and former students free loan calculators, as well as unbiased, personalized advice and repayment plans through an easy-to-use online dashboard.
Founded in 2012 by CEO Andrew Josuweit, who himself had over $100,000 in student loans, Student Loan Hero operates on the belief that all loan help and recommendations should come with honesty and no hidden agenda.
For more information, visit http://studentloanhero.com/.
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1 Important Disclosures for Earnest.
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.
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The information provided on this page is updated as of 08/21/18. 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 email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
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4 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.
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